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section 6621(c)(2)(A)(i) 30 days after November 5, 1998, the date
respondent sent the 30-day letter. At all times that hot
interest might apply in this case, the underlying tax to which it
would apply was $63,573, which is less than the $100,000
threshold for a large corporate underpayment and the application
of hot interest.7 Sec. 6621(c)(3)(A). Nevertheless, respondent
maintains that because the pre-NOL liability for the year ended
January 31, 1994, was $225,753, hot interest should apply.8
Thus, the case before us turns on whether the amount subject to
the threshold determination should be reduced by the NOL9 from
the tax year ended January 31, 1995. Hot interest applies only
to periods after the “applicable date”. Sec. 6621(c)(1); sec.
7In addition to applying to the underlying tax, hot interest
applies to any interest, penalties, additional amounts, and
additions to tax imposed with respect to the underlying tax;
however, the threshold amount is determined based only on the
underlying tax. Sec. 301.6621-3(b)(2)(i) and (ii), Proced. &
Admin. Regs.
8The evidence in the record reflects that the tax shown as
due on petitioner’s return for the tax year ended Jan. 31, 1994,
was zero.
9An NOL is generally defined as the excess of deductions
over gross income. Sec. 172(c). Sec. 172 provides specific
rules allowing NOLs to be carried back to preceding taxable years
and carried forward to future years to reduce a taxpayer’s
taxable income. Sec. 172(a) allows as a deduction for the
taxable year an NOL carryback. If the amount of tax is reduced
by reason of an NOL carryback, the reduction in tax does not
affect the computation of interest under sec. 6601 for the period
ending with the filing date for the taxable year in which the NOL
arises. Sec. 6601(d)(1); see also Manning v. Seeley Tube & Box
Co., 338 U.S. 561, 570 (1950); Intel Corp. & Consol. Subs. v.
Commissioner, 111 T.C. 90, 95 (1998).
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