Oren L. Benton - Page 29

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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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