Oren L. Benton - Page 37

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               1398(i).  The debtor is then free to use the NOL as a                  
               carryforward, section 1398(i), or carryback, as long as                
               the NOL arose before the commencement of the bankruptcy                
               case, section 1398(j)(2)(B).  [Kahle v. Commissioner,                  
               T.C. Memo. 1997-91.]                                                   
          See also McGuirl v. Commissioner, T.C. Memo. 1999-21.                       
               Petitioner argues that he succeeded to NOLs that were                  
          incurred by the operation of the bankruptcy estate and that                 
          section 1398(j)(2)(B) limits only his ability to carry back such            
          NOLs to his taxable years that preceded the commencement of his             
          bankruptcy case.  Thus, he argues, he may use the NOLs in                   
          postcommencement tax years.  We agree with petitioner that the              
          losses succeeded to from the estate may be used, to the extent              
          permitted in section 172, in the debtor’s taxable years beginning           
          with the year in which the bankruptcy commenced.                            
               Some commentators have drawn an analogy between section                
          1398(g) and (i), and section 642(h), which governs the                      
          availability of a trust’s or estate’s unused loss carryovers to             
          the beneficiaries.  In section 642(h) it is clear that a                    
          beneficiary may only carry forward the trust’s or estate’s unused           
          loss carryovers beginning with the year the trust or estate                 
          terminates.  The analogy was likely drawn because of the                    
          acquisition of a trust’s or estate’s tax losses upon the                    
          termination of the trust or estate.  The analogy diminishes in              
          significance, however, because of an important distinction                  
          between the section 642(h) situation and the section 1398                   

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