- 15 -
to the extent such negative income constituted a NOL that was
carried back to prior years and for which refunds were paid to
the taxpayer. In the Court's view, that was the intent of
Congress as reflected in the aforementioned legislative history.
Adding back the NOL to the income of an averaging base year in
such a situation insures against such a result.
The fact that regulations on section 1301 had not been
promulgated at the time the 1998 and 1999 returns in this case
were filed does not preclude this Court from interpreting the
intent of Congress and applying the law as so interpreted. In
Occidental Petroleum Corp. v. Commissioner, 82 T.C. 819, 829
(1984), this Court stated:
We note, of course, that section 58(h) is phrased in
terms of directing the Secretary of the Treasury to
prescribe regulations to carry out the stated legislative
objective, and that the Secretary, to this day, some 8 years
after the effective date of these new provisions, has not
yet promulgated any such regulations. Moreover, we note
further that he has not even published in the Federal
Register any proposed regulations in this respect. However,
the failure to promulgate the required regulations can
hardly render the new provisions of section 58(h)
inoperative. We must therefore do the best we can with
these new provisions. Certainly we cannot ignore them.
Congress could hardly have intended to give the
Treasury the power to defeat the legislatively contemplated
operative effect of such provisions merely by failing to
discharge the statutorily imposed duty to promulgate the
required regulations. As already indicated, we must give
effect to these provisions in the absence of regulations
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