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recognized during 1995, 1996, and 1997 (during the pendency of
the bankruptcy proceeding).11
Petitioner contends that he is entitled to $136 million in
NOLs and $440 million in capital losses from years before and
after the commencement of the bankruptcy. Petitioner’s
contentions present two questions with respect to the application
of the losses to his 1995, 1996, and 1997 nonbankruptcy income,
which petitioner would have earned during the pendency of the
bankruptcy. One question concerns NOL deductions that arose
before the commencement of the bankruptcy and are succeeded to by
the bankruptcy estate, after which any unused losses are returned
to the discharged debtor. The other question involves
circumstances where the NOL deduction arises in the bankruptcy
estate. In that regard, the question is whether the debtor can
use the estate’s losses, succeeded to by the debtor, with respect
to the debtor’s nonbankruptcy income recognized after the
commencement and before the termination of the bankruptcy.
Respondent argues that petitioner is entitled to carry
forward qualified NOLs only to years occurring after the
11 Petitioner’s income tax deficiencies for 1995, 1996, and
1997 are based on respondent’s determination that petitioner
received compensation/income from his bankruptcy estate for each
year. Petitioner contends that the amounts received were
nontaxable proceeds of loans, and respondent contends that the
amounts were compensation or otherwise taxable income. We note
that petitioner’s bankruptcy commenced on Feb. 23, 1995, and
terminated (upon confirmation and discharge) on Aug. 31, 1997.
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