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bankruptcy termination (the year in which petitioner succeeded to
the NOLs from the bankruptcy estate). Petitioner argues that he
may apply losses of the bankruptcy estate that he succeeded to at
confirmation to any year after the commencement of the bankruptcy
(1995 and later). Petitioner also argues that he may apply his
own prebankruptcy NOLs, to the extent not used by the bankruptcy
estate, to his tax years following the commencement of the
bankruptcy.
Section 1398 was enacted to provide rules relating to the
Federal tax regimen to be used in connection with individuals’
chapter 7 or chapter 11 bankruptcies under title 11, U.S.C. See
sec. 1398(a). Section 1398, among other matters, addresses
questions concerning which entity is to recognize income and when
either entity may succeed to the tax attributes of the other.
Ultimately, the question we consider is whether the estate
becomes the preeminent or sole taxpayer (to petitioner’s
exclusion) for purposes of application of NOLs to income for
years occurring during the bankruptcy proceeding. At the
commencement of the bankruptcy, the estate becomes a taxable
entity treated as an individual taxpayer with respect to the
computation of income from assets being administered in the
estate under title 11, U.S.C. The debtor continues as a separate
taxable entity during the pendency of the bankruptcy, with
respect to income that the bankruptcy estate is not entitled to
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