Oren L. Benton - Page 36

                                       - 36 -                                         
               Section 1.172-1(b), Income Tax Regs., also describes the               
          steps to be taken to ascertain an NOL deduction for a given                 
          taxable year.  It describes NOL carryovers from “preceding                  
          taxable years” and NOL carrybacks from such “succeeding taxable             
          years”.  An NOL deduction from any given year maintains its                 
          character of arising in that year when carried back or carried              
          forward.  See sec. 1.172-6, Income Tax Regs.  In addition,                  
          section 1.172-4(a)(3), Income Tax Regs., provides:                          
               The amount which is carried back or carried over to any                
               taxable year is the net operating loss to the extent it                
               was not absorbed in the computation of the taxable (or                 
               net) income for other taxable years, preceding such                    
               taxable year, to which it may be carried back or                       
               carried over.                                                          
               Section 172, therefore, requires that the losses be carried            
          back and forward in a certain order and places outer limits on              
          the years to which the losses may be applied.  The regimen of               
          section 172 also provides that the year from which the loss                 
          emanates does not change.  Therefore, losses acquired by the                
          estate or acquired or reacquired by the debtor would be time                
          limited according to the source year of the loss.                           
               Accordingly, sections 1398 and 172 do not circumscribe                 
          petitioner’s ability to carry forward prepetition NOLs that he              
          succeeded to from the bankruptcy estate.  This view is supported            
          in the following dicta:                                                     
               Any remaining NOL belonging to the estate will be                      
               returned to the debtor-taxpayer after the discharge in                 
               bankruptcy and termination of the estate.  Sec.                        

Page:  Previous  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  Next

Last modified: May 25, 2011