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Blanton Coal Co. v. Commissioner, T.C. Memo. 1984-397, and cases
cited therein.3
We agree with petitioner that any NOLs attributable to the
$84 million in suspended passive losses are not prebankruptcy
NOLs of petitioner. An analysis of the statutes and the parties’
agreement in the bankruptcy proceeding reveals that the net
operating losses did not exist before the bankruptcy. To the
extent that our statement in Benton I that the NOLs had “arisen
before the commencement of the bankruptcy”, Benton v.
Commissioner, 122 T.C. at 357, could be interrupted otherwise, it
is incorrect.4
The $84 million in suspended passive losses became allowable
upon the Benton estate’s transfer of its interest in the passive
activities to the liquidating trust. In addition, under
paragraph 6 of the parties’ bankruptcy settlement agreement, the
$84 million in suspended passive activity losses was a tax
3 As we observed in Blanton Coal Co. v. Commissioner, T.C.
Memo. 1984-397, in computing various additions to tax and/or
penalties, longstanding caselaw would permit the reduction of
additions and penalties by NOLs attributable to carryforward
deductions, but not by those attributable to carryback
deductions.
4 In Benton I we decided a legal question on the basis of
parties’ representations of the underlying facts in their motions
for summary judgment. The outcome of the legal question in
Benton I did not depend on factual findings made by the Court.
In the setting of a motion for summary judgment, the facts are
not “found”. The parties’ stated facts are interpreted by the
Court in a manner most favorable to the party opposing summary
judgment. See Bond v. Commissioner, 100 T.C. 32, 36 (1993).
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