Oren L. Benton - Page 33

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          responsible for the income tax attributes for any assets that the           
          debtor retains outside of the bankruptcy proceeding.  In effect,            
          the statute creates two separate, but parallel, taxpayers during            
          the bankruptcy estate, followed by the recombination of both                
          their attributes into one upon the estate’s termination.14                  
          Significantly, with respect to the tax attributes, the                      
          debtor/taxpayer is the predecessor to and successor of the                  
          bankruptcy estate.                                                          
               The parties agree that section 1398 permits a debtor to                
          carry forward either losses sourced in tax years prior to the               
          bankruptcy commencement or losses which the debtor acquired from            
          the estate.  The dispute concerns whether the losses may be                 
          carried forward from the commencement of the bankruptcy                     
          proceeding or are limited to the period beginning with the                  
          termination of the estate.  So, for example, we consider whether            
          petitioner may carry forward his own prebankruptcy NOL, to the              
          extent not used or absorbed by the estate, to his 1995, 1996,               
          and/or 1997 tax years.  This matter is further complicated by the           
          two parallel but separate taxpayers (estate and debtor) for the             
          1995, 1996, and 1997 tax years.  Ultimately, the question is                
          whether the bankruptcy estate becomes the preeminent or sole                
          taxpayer (to petitioner’s exclusion) for purposes of carryforward           

               14 We note that only the estate is expressly permitted to              
          carry back losses to precommencement years during the bankruptcy.           
          Sec. 1398(j)(2)(A).                                                         





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