Oren L. Benton - Page 11

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         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.                                                       





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