- 11 -
passive activity losses is available to be carried to his 1995,
1996, and 1997 tax years so as to offset entirely all taxable
income adjustments for those years made by respondent in the
notice of deficiency. Petitioner also contends that respondent
failed to determine the Benton estate’s correct taxable income
for its tax years ended January 31, 1996, January 31, 1997, and
August 31, 1998. In particular, petitioner contends that
respondent failed to analyze and properly compute the Benton
estate’s tax attributes to which petitioner would succeed,
including NOLs attributable to the suspended passive activity
losses, capital losses, and any other losses not used by that
estate. Conversely, respondent contends that, to the extent any
of the $84 million of NOLs derived from suspended passive
activity losses is substantiated, they are prebankruptcy NOLs of
petitioner, which paragraph 8 of the settlement agreement
specifically limits to petitioner’s postconfirmation (1997 and
later) use (and are not available for petitioner’s 1995 and 1996
tax years).2 In that regard, respondent relies upon a “finding”
in Benton v. Commissioner, 122 T.C. at 357, that NOLs
attributable to the $84 million in suspended passive activity
losses “had arisen before the commencement of the bankruptcy”.
2 We note that irrespective of the operation of the tax and
bankruptcy laws, respondent’s position is inconsistent with the
settlement agreement.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011