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2. Held, further, net operating losses to which P
succeeded upon discharge in bankruptcy must be reduced
by the amount of discharge of indebtedness income that,
pursuant to sec. 108(b)(2), I.R.C., was excluded from
his gross income as a result of his bankruptcy
discharge.
3. Held, further, P is not liable for the
accuracy-related penalty under sec. 6662(a), I.R.C.,
for any year at issue.
Lawrence G. Williams, pro se.
Lydia A. Branche, for respondent.
KROUPA, Judge: Respondent determined deficiencies in
petitioner’s income taxes for the years 1996 through 2000
resulting from operating losses sustained by two S corporations
in 1990 that petitioner reported on his individual tax return in
1990, the year in which petitioner filed for bankruptcy, and
carried forward through 2000.1 Respondent also determined that
petitioner is liable for the accuracy-related penalty under
section 6662(a) for each year at issue.
The three issues for decision are:
(1) Whether petitioner or his individual bankruptcy estate
(Estate) is entitled to report operating losses sustained during
1990 by two S corporations in which petitioner owned all of the
shares as of the date of filing bankruptcy. We hold that the
Estate, not petitioner, is entitled to report the losses.
1Petitioner originally filed a ch. 7 bankruptcy petition on
Dec. 3, 1990, then converted it to a ch. 11 bankruptcy in 1991.
The conversion is irrelevant for purposes of our analysis because
secs. 108 and 1398 apply to both chapters if the debtor is an
individual.
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