Oren L. Benton - Page 34

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          of pretermination NOLs to the bankruptcy years; in other words,             
          whether petitioner is limited to posttermination (1997 and later)           
          year carryforwards because of the estate’s application of the               
          debtor’s precommencement losses and the estate’s losses to any of           
          the debtor’s precommencement and the estate’s postcommencement              
          income.  Although the statute expressly prohibits carrybacks by             
          the debtor with respect to years before the commencement of the             
          bankruptcy, there is no such limitation with respect to                     
          carryforwards to postcommencement years.                                    
               Because of the parallel treatment on the income side of the            
          equation (requiring the debtor and the estate to report only the            
          income to which each is entitled), it follows that the debtor’s             
          precommencement and the estate’s losses, to the extent not fully            
          absorbed during the bankruptcy years, should be applied to any              
          parallel income of the debtor during those same years.  Although            
          the ordering of such losses (computation and application) could             
          become complex, it is, nevertheless, appropriate.  There is                 
          nothing in section 1398 which would prohibit such treatment.15              
          Indeed, the approach of section 1398 regarding the income side              
          would seem to promote this result with respect to the losses.  If           
          a debtor were unable to apply post- or pre-bankruptcy losses to             

               15 Other than the limitation on the debtor’s ability to                
          apply carrybacks to prebankruptcy years, sec. 1398 does not                 
          provide any rules or limitations as to the calculation or use of            
          carrybacks or carryovers of NOLs.  Sec. 1398 references sec. 172            
          for such matters.                                                           





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