Med James, Inc. - Page 15

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          affd. 737 F.2d 1440 (5th Cir. 1984); sec. 1.11-1(b), Income Tax             
          Regs.  Section 172(a) allows as a deduction for the taxable year            
          an NOL carryback.  NOLs in tax years beginning before August 6,             
          1997, may generally be carried back to the 3 years preceding the            
          loss year and then forward to 15 years following the loss year.             
          Sec. 172(b)(1)(A); Taxpayer Relief Act of 1997, Pub. L. 105-34,             
          sec. 1082(a), 111 Stat. 950; see also Intermet Corp. & Subs. v.             
          Commissioner, 117 T.C. 133, 136 n.1 (2001).                                 
               At the time petitioner filed its Federal income tax return             
          for the tax year ended January 31, 1994, it understated its                 
          income tax by $225,753.  The tax shown as due on petitioner’s               
          return for the year was zero.  The parties agree that for the tax           
          year ended January 31, 1995, petitioner incurred an NOL which it            
          was entitled to carry back to the year in issue.  Section 172(a)            
          treats the NOL carryback as a deduction from petitioner’s income.           
          This deduction reduced petitioner’s taxable income, and                     
          correspondingly reduced its tax, as imposed by the Code, for the            
          tax year ended January 31, 1994, to $63,573.  Therefore, under a            
          straightforward application of the statute and the Commissioner’s           
          own regulations, the excess of the tax imposed by the Code for              
          the tax year at issue over the amount of tax paid on or before              
          the return due date was $63,573.                                            









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