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that the Commissioner did not in the notice of deficiency dispute
that they had NOL carryovers to 1998 and 1999 in the amounts so
claimed. Petitioners conclude from their reading of the notice
of deficiency that they may deduct the NOLs in the amounts
claimed on the subject returns if they establish: (1) Their
basis in the S corporations and (2) that the carryover period for
the NOLS has not expired. When this case was tried on May 9,
2003, respondent’s counsel in his opening statement stated
specifically that the substantiation of the existence, amounts,
and years of petitioners’ NOLs was in issue. Respondent also
stated similarly in his trial memorandum served upon petitioners’
counsel on April 17, 2003.
Section 172 allows a taxpayer to deduct an NOL for a taxable
year. The amount of the NOL deduction equals the sum of the NOL
carryovers plus NOL carrybacks to that year. Sec. 172(a).
Absent an election to the contrary, an NOL for any taxable year
must first be carried back 3 years and then carried over 15
years. Sec. 172(b)(1)(A), (2), and (3).4 A taxpayer claiming an
NOL deduction for a taxable year must file with his return for
that year a concise statement setting forth the amount of the NOL
deduction claimed and all material and pertinent facts, including
4 In 1997, sec. 172(b)(1)(A) was amended to generally
require a 2-year carryback and a 20-year carryover for NOLs
incurred in taxable years beginning after Aug. 5, 1997. Neither
party asserts that this amendment is applicable here, and we
conclude it is not.
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