Robert J. Merlo - Page 15

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          ATNOL is the same as his NOL, taking into consideration all the             
          adjustments to his taxable income under sections 56, 57, and 58.            
          See sec. 56(a)(4), (d)(1).  No adjustments under those sections             
          modify the exclusion of net capital losses from the NOL                     
          computation under section 172(d)(2)(A).  Therefore, petitioner’s            
          net AMT capital loss is excluded for purposes of calculating his            
          ATNOL deduction.  As a result, petitioner’s AMT capital loss                
          realized in 2001 does not create an ATNOL that can be carried               
          back to 2000 under sections 56 and 172(b).                                  
          D.   Petitioner’s Other Arguments                                           
               Petitioner raises various other arguments in an attempt to             
          carry back his 2001 AMT capital loss to reduce his 2000 AMTI.               
          Petitioner’s additional arguments can be categorized into three             
          groups:  (1) Arguments premised on misinterpretations and                   
          misapplications of the Code sections outlined above; (2)                    
          arguments based on congressional intent; and (3) arguments based            
          on equity and public policy.                                                
               As outlined above, the applicable Code sections do not allow           
          petitioner to carry back his AMT capital loss, and arguments                
          misinterpreting and misapplying those sections will not be                  
          addressed individually.                                                     
               Petitioner asserts that “the intent of Congress in imposing            
          an AMT tax on deferral preferences [including ISOs] was to                  
          accelerate the taxation of economic income without creating an              






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