- 10 -
Commissioner, 71 T.C. 633, 639 (1979); Jones v. Commissioner,
supra at 1104. Petitioners’ burden requires at a minimum that
they establish that: (1) They had an NOL in at least one
specified taxable year before 1998, (2) they elected to forgo a
carryback of that NOL, see sec. 172(b)(3),8 or, if they made no
such election, the NOL could not be fully applied against income
in the 3 taxable years immediately preceding the taxable year of
the NOL, (3) the NOL (as adjusted by the amounts applied in
carryback years) could not be applied against income in the
taxable years immediately and chronologically following the
taxable year of the NOL, and (4) that 1998 is no more than 15
taxable years after the taxable year of the NOL that they seek to
apply in 1998, and 1999 is no more than 15 taxable years after
the taxable year of the NOL that they seek to apply in 1999. As
we explained in Lassiter v. Commissioner, T.C. Memo. 2002-25:
Under a plain reading of section 172(b)(1)(A)(i),
a taxpayer * * * must first apply an NOL loss to his
third taxable year preceding the loss, then apply any
remaining portion of that loss to his second taxable
year preceding the loss, and then apply any portion of
the loss that still remains to his taxable year
immediately preceding the loss. If the NOL is not
7(...continued)
those calculations a deduction for personal exemptions. See sec.
172(d)(3).
8 Sec. 172(b)(3) allows a taxpayer to elect to relinquish
the carryback period. Such an election must be made, in a
prescribed manner, by the due date (including extensions) for
filing the taxpayer’s return for the NOL year in which the
election is to be in effect. Id.
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