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pertinent to this controversy, the settlement agreement
provided that
6. Amount of Carryforward of Suspended Passive
Activity Losses Into the Benton Estate. Oren L. Benton
[petitioner] shall be allowed a passive activity loss
carryforward under section 469 of the Internal Revenue
Code * * * in the amount of Eighty Four Million
Dollars ($84,000,000) from his pre-petition income tax
periods ending on or before February 22, 1995. This
suspended passive activity loss carryforward is an
attribute of Oren L. Benton which passed to the Benton
Bankruptcy Estate on the [bankruptcy] petition date
pursuant to I.R.C. section 1398.
7. Deemed Disposition of Passive Activities. All
passive activities identified by the IRS in its RARs or
by Benton in their tax returns will be deemed disposed
of in a taxable transaction on the effective date of
the pending liquidation plan of reorganization for the
Benton estate when the passive activity assets are
transferred into a liquidation trust. Either the
Benton Estate or the liquidating trust shall pay any
Federal income tax which may result from this
transaction.
8. Net Operating Losses Under IRC 172. Oren Benton
shall not be allowed any net operating losses under
section 172 arising in any taxable period on or before
the [February 23, 1995, bankruptcy] Petition Date which
might be carried forward to any tax period of the
Benton Estate. No net operating losses under section
172 generated by the Benton Estate or the bankruptcy
estates of the other debtors in the jointly
administered bankruptcy cases shall be carried backward
to any pre-petition income tax period of Oren Benton or
except for losses identified in paragraph 6 forward to
any post confirmation income tax period of Oren Benton.
A second amended plan of reorganization (the plan), dated
August 18, 1997, for petitioner and his related bankruptcy
estates was to be effective on August 31, 1997. Until the
August 18, 1997, confirmation of the plan, petitioner served as
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