Oren L. Benton - Page 9

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          estate”.  Petitioner contends that, in the context of his chapter           
          11 bankruptcy reorganization, the estate terminated at the time             
          of the confirmation of the plan of reorganization and discharge             
          of the debtor.3  Respondent contends that the bankruptcy estate             
          does not terminate until the bankruptcy proceeding is formally              
          closed.4  We must resolve this threshold question before                    
          considering whether petitioner is entitled to use certain net               
          operating loss deductions from the bankruptcy estate.                       
               The relationship, for Federal tax purposes, between a                  
          bankrupt and a chapter 11 bankruptcy estate has been described as           
               The filing of a bankruptcy petition under Chapter 11                   
               creates a new taxable entity, the bankruptcy estate,                   
               that is separate from the debtor.  Sec. 1398.  The                     
               bankruptcy estate computes its taxable income in the                   
               same manner as an individual does, except that the                     
               entity must use the tax rates applicable to a married                  
               individual filing a separate return.  Sec. 1398(c).                    
                    Further, the bankruptcy estate succeeds to and                    
               takes into account the individual debtor’s tax                         
               attributes (e.g., any NOL [net operating loss]                         

               3 Our consideration of the issues in this case is limited to           
          the effect of sec. 1398 in the context of an individual ch. 11              
          bankruptcy reorganization.                                                  
               4 We note that at the time of the filing of the motion for             
          summary judgment, the bankruptcy court had not entered a final              
          order closing petitioner’s ch. 11 proceeding.  If we were to hold           
          that the closing of the bankruptcy proceeding was the time of               
          “termination”, the bankruptcy estate’s tax attributes would not             
          transfer to petitioner until the closing of the estate.  That               
          could create a situation where petitioner would not be able to              
          use the tax attributes even though the bankruptcy estate no                 
          longer controlled the assets or needed the tax attributes.                  

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