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172(b)(1)(A). Section 172(c) defines an NOL as “the excess of
the deductions allowed by this chapter over the gross income,” as
modified under section 172(d). In the case of a noncorporate
taxpayer, the amount deductible on account of capital losses
shall not exceed the amount includable on account of capital
gains. Sec. 172(d)(2)(A); sec. 1.172-3(a)(2), Income Tax Regs.
The effect of section 172(d)(2)(A) is that net capital losses are
excluded from the NOL computation. See Parekh v. Commissioner,
T.C. Memo. 1998-151.
For AMT purposes, section 56(a)(4) provides that an ATNOL
deduction shall be allowed in lieu of an NOL deduction under
section 172. An ATNOL deduction is defined as the NOL deduction
allowable under section 172 and is computed by taking into
consideration all the adjustments to taxable income under
sections 56 and 58 and all the preference items under section 57
(but only to the extent that the preference items increased the
NOL for the year for regular tax purposes).12 Sec. 56(d)(1).
Petitioner’s net regular capital loss is excluded from
computing his NOL deduction. See sec. 172(c), (d)(2)(A); sec.
1.172-3(a)(2), Income Tax Regs. For AMT purposes, petitioner’s
11(...continued)
because we conclude infra that petitioner is not entitled to an
ATNOL, petitioner’s argument is moot.
12 Sec. 56(d)(1)(A) also limits the amount of the allowable
ATNOL deduction; this is not in issue.
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