Allan & Judy N. Green - Page 6

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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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