§172 — Net operating loss deduction
300 citing cases
Statute Text — 26 U.S.C. §172
There shall be allowed as a deduction for the taxable year an amount equal to—
in the case of a taxable year beginning before
January 1, 2021
, the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and
in the case of a taxable year beginning after
December 31, 2020
, the sum of—
the aggregate amount of net operating losses arising in taxable years beginning before
January 1, 2018
, carried to such taxable year, plus
the lesser of—
the aggregate amount of net operating losses arising in taxable years beginning after
December 31, 2017
, carried to such taxable year, or
80 percent of the excess (if any) of—
taxable income computed without regard to the deductions under this section and sections 199A and 250, over
the amount determined under subparagraph (A).
For purposes of this subtitle, the term “net operating loss deduction” means the deduction allowed by this subsection.
A net operating loss for any taxable year—
shall be a net operating loss carryback to the extent provided in subparagraphs (B), (C)(i), and (D), and
except as provided in subparagraph (C)(ii), shall be a net operating loss carryover—
in the case of a net operating loss arising in a taxable year beginning before
January 1, 2018
, to each of the 20 taxable years following the taxable year of the loss, and
in the case of a net operating loss arising in a taxable year beginning after
December 31, 2017
, to each taxable year following the taxable year of the loss.
In the case of any portion of a net operating loss for the taxable year which is a farming loss with respect to the taxpayer, such loss shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss.
For purposes of this section, the term “farming loss” means the lesser of—
the amount which would be the net operating loss for the taxable year if only income and deductions attributable to farming businesses (as defined in section 263A(e)(4)) are taken into account, or
the amount of the net operating loss for such taxable year.
For purposes of applying paragraph (2), a farming loss for any taxable year shall be treated as a separate net operating loss for such taxable year to be taken into account after the remaining portion of the net operating loss for such taxable year.
Any taxpayer entitled to a 2-year carryback under clause (i) from any loss year may elect not to have such clause apply to such loss year. Such election shall be made in such manner as prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.
In the case of an insurance company (as defined in section 816(a)) other than a life insurance company, the net operating loss for any taxable year—
shall be a net operating loss carryback to each of the 2 taxable years preceding the taxable year of such loss, and
shall be a net operating loss carryover to each of the 20 taxable years following the taxable year of the loss.
In the case of any net operating loss arising in a taxable year beginning after
December 31, 2017
, and before
January 1, 2021
—
such loss shall be a net operating loss carryback to each of the 5 taxable years preceding the taxable year of such loss, and
subparagraphs (B) and (C)(i) shall not apply.
For purposes of this subparagraph—
A net operating loss for a REIT year shall not be a net operating loss carryback to any taxable year preceding the taxable year of such loss.
In the case of any net operating loss for a taxable year which is not a REIT year, such loss shall not be carried to any preceding taxable year which is a REIT year.
For purposes of this subparagraph, the term “REIT year” means any taxable year for which the provisions of part II of subchapter M (relating to real estate investment trusts) apply to the taxpayer.
In the case of a life insurance company, if a net operating loss is carried pursuant to clause (i)(I) to a life insurance company taxable year beginning before January 1, 2018, such net operating loss carryback shall be treated in the same manner as an operations loss carryback (within the meaning of section 810 as in effect before its repeal) of such company to such taxable year.
If a net operating loss of a taxpayer is carried pursuant to clause (i)(I) to any taxable year in which an amount is includible in gross income by reason of section 965(a), the taxpayer shall be treated as having made the election under section 965(n) with respect to each such taxable year.
If the 5-year carryback period under clause (i)(I) with respect to any net operating loss of a taxpayer includes 1 or more taxable years in which an amount is includible in gross income by reason of section 965(a), the taxpayer may, in lieu of the election otherwise available under paragraph (3), elect under such paragraph to exclude all such taxable years from such carryback period.
An election under paragraph (3) (including an election described in subclause (I)) with respect to a net operating loss arising in a taxable year beginning in 2018 or 2019 shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the first taxable year ending after the date of the enactment of this subparagraph.
The entire amount of the net operating loss for any taxable year (hereinafter in this section referred to as the “loss year”) shall be carried to the earliest of the taxable years to which (by reason of paragraph (1)) such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the taxable income for any such prior taxable year shall—
be computed with the modifications specified in subsection (d) other than paragraphs (1), (4), and (5) thereof, and by determining the amount of the net operating loss deduction without regard to the net operating loss for the loss year or for any taxable year thereafter,
not be considered to be less than zero, and
for taxable years beginning after
December 31, 2020
, be reduced by 20 percent of the excess (if any) described in subsection (a)(2)(B)(ii) for such taxable year.
Any taxpayer entitled to a carryback period under paragraph (1) may elect to relinquish the entire carryback period with respect to a net operating loss for any taxable year. Such election shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss for which the election is to be in effect. Such election, once made for any taxable year, shall be irrevocable for such taxable year.
For purposes of this section, the term “net operating loss” means the excess of the deductions allowed by this chapter over the gross income. Such excess shall be computed with the modifications specified in subsection (d).
The modifications referred to in this section are as follows:
No net operating loss deduction shall be allowed.
In the case of a taxpayer other than a corporation—
the amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets; and
the exclusion provided by section 1202 shall not be allowed.
No deduction shall be allowed under section 151 (relating to personal exemptions). No deduction in lieu of any such deduction shall be allowed.
In the case of a taxpayer other than a corporation, the deductions allowable by this chapter which are not attributable to a taxpayer’s trade or business shall be allowed only to the extent of the amount of the gross income not derived from such trade or business. For purposes of the preceding sentence—
any gain or loss from the sale or other disposition of—
property, used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 167, or
real property used in the trade or business,
shall be treated as attributable to the trade or business;
the modifications specified in paragraphs (1), (2)(B), and (3) shall be taken into account;
any deduction for casualty or theft losses allowable under paragraph (2) or (3) of section 165(c) shall be treated as attributable to the trade or business; and
any deduction allowed under section 404 to the extent attributable to contributions which are made on behalf of an individual who is an employee within the meaning of section 401(c)(1) shall not be treated as attributable to the trade or business of such individual.
The deductions allowed by sections 243 (relating to dividends received by corporations) and 245 (relating to dividends received from certain foreign corporations) shall be computed without regard to section 246(b) (relating to limitation on aggregate amount of deductions).
In the case of any taxable year for which part II of subchapter M (relating to real estate investment trusts) applies to the taxpayer—
the net operating loss for such taxable year shall be computed by taking into account the adjustments described in section 857(b)(2) (other than the deduction for dividends paid described in section 857(b)(2)(B));
where such taxable year is a “prior taxable year” referred to in paragraph (2) of subsection (b), the term “taxable income” in such paragraph shall mean “real estate investment trust taxable income” (as defined in section 857(b)(2)); and
subsection (a)(2)(B)(ii)(I) shall be applied by substituting “real estate investment trust taxable income (as defined in section 857(b)(2) but without regard to the deduction for dividends paid (as defined in section 561))” for “taxable income”.
Any deduction under section 199A shall not be allowed.
The deduction under section 250 shall not be allowed.
In determining the amount of any net operating loss carryback or carryover to any taxable year, the necessary computations involving any other taxable year shall be made under the law applicable to such other taxable year.
In the case of an insurance company (as defined in section 816(a)) other than a life insurance company—
the amount of the deduction allowed under subsection (a) shall be the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and
subparagraph (C) of subsection (b)(2) shall not apply.
For treatment of net operating loss carryovers in certain corporate acquisitions, see section 381.
For special limitation on net operating loss carryovers in case of a corporate change of ownership, see section 382.
Treasury Regulations
-
Treas. Reg. §1.172-1Net operating loss deduction
(a) Allowance of deduction. Section 172(a) allows as a deduction in computing taxable income for any taxable year subject to the Code the aggregate of the net operating loss carryovers and net operating loss carrybacks to such taxable year. This deduction is referred to as the net operating loss deduction. The net operating loss is the basis for the computation of the net operating loss carryovers and net operating loss carrybacks and ultimately for the net operating loss deduction itself. The net operating loss deduction shall not be disallowed for any taxable year merely because the taxpayer has no income from a trade or business for the taxable year.
(b) Steps in computation of net operating loss deduction. The three steps to be taken in the ascertainment of the net operating loss deduction for any taxable year subject to the Code are as follows:
(1) Compute the net operating loss for any preceding or succeeding taxable year from which a net operating loss may be carried over or carried back to such taxable year.
(2) Compute the net operating loss carryovers to such taxable year from such preceding taxable years and the net operating loss carrybacks to such taxable year from such succeeding taxable years.
(3) Add such net operating loss carryovers and carrybacks in order to determine the net operating loss deduction for such taxable year.
(c) Statement with tax return. Every taxpayer claiming a net operating loss deduction for any taxable year shall file with his return for such year a concise statement setting forth the amount of the net operating loss deduction claimed and all material and pertinent facts relative thereto, including a detailed schedule showing the computation of the net operating loss deduction.
(d) Ascertainment of deduction dependent upon net operating loss carryback. If the taxpayer is entitled in computing his net operating loss deduction to a carryback which he is not able to ascertain at the time his return is due, he shall compute the net operating loss deduction on his return without regard to such net operating loss carryback. When the taxpayer ascertains the net operating loss carryback, he may within the applicable period of limitations file a claim for credit or refund of the overpayment, if any, resulting from the failure to compute the net operating loss deduction for the taxable year with the inclusion of such carryback; or he may file an application under the provisions of section 6411 for a tentative carryback adjustment.
(e) Law applicable to computations. (1) In determining the amount of any net operating loss carryback or carryover to any taxable year, the necessary computations involving any other taxable year shall be made under the law applicable to such other taxable year.
(2) The net operating loss for any taxable year shall be determined under the law applicable to that year without regard to the year to which it is to be carried and in which, in effect, it is to be deducted as part of the net operating loss deduction.
(3) The amount of the net operating loss deduction which shall be allowed for any taxable year shall be determined under the law applicable to that year.
(f) Electing small business corporations. In determining the amount of the net operating loss deduction of any corporation, there shall be disregarded the net operating loss of such corporation for any taxable year for which such corporation was an electing small business corporation under subchapter S (section 1371 and following), chapter 1 of the Code. In applying section 172(b)(1) and (2) to a net operating loss sustained in a taxable year in which the corporation was not an electing small business corporation, a taxable year in which the corporation was an electing small business corporation is counted as a taxable year to which such net operating loss is carried back or over. However, the taxable income for such year as determined under section 172(b)(2) is treated as if it were zero for purposes of computing the balance of the loss available to the corporation as a carryback or carryover to other taxable years in which the corporation is not an electing small business corporation. See section 1374 and the regulations thereunder for allowance of a deduction to shareholders for a net operating loss sustained by an electing small business corporation.
(g) Husband and wife. The net operating loss deduction of a husband and wife shall be determined in accordance with this section, but subject also to the provisions of § 1.172-7.
-
Treas. Reg. §1.172-1(a)Allowance of deduction.
Allowance of deduction. Section 172(a) allows as a deduction in computing taxable income for any taxable year subject to the Code the aggregate of the net operating loss carryovers and net operating loss carrybacks to such taxable year. This deduction is referred to as the net operating loss deduction. The net operating loss is the basis for the computation of the net operating loss carryovers and net operating loss carrybacks and ultimately for the net operating loss deduction itself. The net operating loss deduction shall not be disallowed for any taxable year merely because the taxpayer has no income from a trade or business for the taxable year.
-
Treas. Reg. §1.172-1(b)Steps in computation of net operating loss deduction.
Steps in computation of net operating loss deduction. The three steps to be taken in the ascertainment of the net operating loss deduction for any taxable year subject to the Code are as follows:
(1) Compute the net operating loss for any preceding or succeeding taxable year from which a net operating loss may be carried over or carried back to such taxable year.
(2) Compute the net operating loss carryovers to such taxable year from such preceding taxable years and the net operating loss carrybacks to such taxable year from such succeeding taxable years.
(3) Add such net operating loss carryovers and carrybacks in order to determine the net operating loss deduction for such taxable year.
-
Treas. Reg. §1.172-1(c)Statement with tax return.
Statement with tax return. Every taxpayer claiming a net operating loss deduction for any taxable year shall file with his return for such year a concise statement setting forth the amount of the net operating loss deduction claimed and all material and pertinent facts relative thereto, including a detailed schedule showing the computation of the net operating loss deduction.
-
Treas. Reg. §1.172-1(d)Ascertainment of deduction dependent upon net operating loss carryback.
Ascertainment of deduction dependent upon net operating loss carryback. If the taxpayer is entitled in computing his net operating loss deduction to a carryback which he is not able to ascertain at the time his return is due, he shall compute the net operating loss deduction on his return without regard to such net operating loss carryback. When the taxpayer ascertains the net operating loss carryback, he may within the applicable period of limitations file a claim for credit or refund of the overpayment, if any, resulting from the failure to compute the net operating loss deduction for the taxable year with the inclusion of such carryback; or he may file an application under the provisions of section 6411 for a tentative carryback adjustment.
-
Treas. Reg. §1.172-1(e)Law applicable to computations.
Law applicable to computations. (1) In determining the amount of any net operating loss carryback or carryover to any taxable year, the necessary computations involving any other taxable year shall be made under the law applicable to such other taxable year.
(2) The net operating loss for any taxable year shall be determined under the law applicable to that year without regard to the year to which it is to be carried and in which, in effect, it is to be deducted as part of the net operating loss deduction.
(3) The amount of the net operating loss deduction which shall be allowed for any taxable year shall be determined under the law applicable to that year.
-
Treas. Reg. §1.172-1(f)Electing small business corporations.
Electing small business corporations. In determining the amount of the net operating loss deduction of any corporation, there shall be disregarded the net operating loss of such corporation for any taxable year for which such corporation was an electing small business corporation under subchapter S (section 1371 and following), chapter 1 of the Code. In applying section 172(b)(1) and (2) to a net operating loss sustained in a taxable year in which the corporation was not an electing small business corporation, a taxable year in which the corporation was an electing small business corporation is counted as a taxable year to which such net operating loss is carried back or over. However, the taxable income for such year as determined under section 172(b)(2) is treated as if it were zero for purposes of computing the balance of the loss available to the corporation as a carryback or carryover to other taxable years in which the corporation is not an electing small business corporation. See section 1374 and the regulations thereunder for allowance of a deduction to shareholders for a net operating loss sustained by an electing small business corporation.
-
Treas. Reg. §1.172-1(g)Husband and wife.
Husband and wife. The net operating loss deduction of a husband and wife shall be determined in accordance with this section, but subject also to the provisions of § 1.172-7.
-
Treas. Reg. §1.172-10Net operating losses of real estate investment trusts
(a) Taxable years to which a loss may be carried. (1) A net operating loss sustained by a qualified real estate investment trust (as defined in paragraph (b)(1) of this section) in a qualified taxable year (as defined in paragraph (b)(2) of this section) ending after October 4, 1976, shall not be carried back to a preceding taxable year.
(2) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending before October 5, 1976, shall be carried back to the 3 preceding taxable years. However, see § 1.857-2(a)(5), which does not allow the net operating loss deduction in computing real estate investment trust taxable income for taxable years ending before October 5, 1976.
(3) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending after December 31, 1972, shall be carried over to the 15 succeeding taxable years. However, see § 1.857-2(a)(5).
(4) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending before January 1, 1973, shall be carried over to 8 succeeding taxable years. However, see § 1.857-2(a)(5).
(5) A net operating loss sustained in a taxable year for which the taxpayer is not a qualified real estate investment trust generally may be carried back to the 3 preceding taxable years; however, a net operating loss sustained in a taxable year ending after December 31, 1975, shall not be carried back to any qualified taxable year. However, see § 1.857-2(a)(5), with respect to a net operating loss sustained in a taxable year ending before January 1, 1976.
(6) A net operating loss sustained in a taxable year ending after December 31, 1975, for which the taxpayer is not a qualified real estate investment trust generally may be carried over to the 15 succeeding taxable years.
(7)(i) A net operating loss sustained in a taxable year ending before January 1, 1986, for which the taxpayer is not a qualified real estate investment trust generally may be a net operating loss carryover to each of the 5 succeeding taxable years. However, where the loss was a net operating loss carryback to one or more qualified taxable years, the net operating loss, in accordance with paragraph (a)(7)(ii) of this section shall be—
(A) Carried over to the 15 succeeding taxable years if the loss could be a net operating loss carryover to a taxable year ending in 1981, or
(B) Carried over to the 5, 6, 7, or 8 succeeding taxable years if paragraph (a)(7)(i)(A) of this section does not apply.
(ii) For purposes of determining whether a net operating loss could be a carryover to a taxable year ending in 1981 under paragraph (a)(7)(i)(A) of this section or, where paragraph (a)(7)(i)(A) of this section does not apply, to determine the actual carryover period under paragraph (a)(7)(i)(B) of this section, the net operating loss shall have a carryover period of 5 years, and such period shall be increased (to a number not greater than 8) by the number of qualified taxable years to which such loss was a net operating loss carryback; however, where the taxpayer acted so as to cause itself to cease to be a qualified real estate investment trust and the principal purpose for such action was to secure the benefit of the allowance of a net operating loss carryover under section 172(b)(1)(B), the net operating loss carryover period shall be limited to 5 years. However, see § 1.857-2(a)(5).
(8) A qualified taxable year is a taxable year preceding or following the taxable year of the net operating loss, for purposes of section 172(b)(1), even though the loss may not be carried to, or allowed as a deduction in, such qualified taxable year. Thus, a qualified taxable year ending before October 5, 1976 (for which no net operating loss deduction is allowable) is nevertheless a preceding or following taxable year for purposes of section 172(b)(1). Moreover, a qualified taxable year ending after October 4, 1976 (to which a net operating loss cannot be carried back because of section 172(b)(1)(E)) is nevertheless a preceding taxable year for purposes of section 172(b)(1). For purposes of determining, under section 172(b)(2), the balance of the loss available as a carryback or carryover to other taxable years, however, the net operating loss is not reduced on account of such qualified taxable year being a preceding or following taxable year.
(b) Definitions. For purposes of this section and §§ 1.172-2 and 1.172-5:
(1) The term qualified real estate investment trust means, with respect to any taxable year, a real estate investment trust within the meaning of part II of subchapter M which is taxable for such year under that part as a real estate investment trust, and
(2) The term qualified taxable year means a taxable year for which the taxpayer is a qualified real estate investment trust.
(c) Examples. The provisions of this section may be illustrated by the following examples:
(d) Cross references. See §§ 1.172-2(c) and 1.172-5(a)(5) for the computation of the net operating loss of a qualified real estate investment trust for a taxable year ending after October 4, 1976, and the amount of a net operating loss which is absorbed when carried over to a qualified taxable year ending after October 4, 1976. See § 1.857-2(a)(5), which provides that for a taxable year ending before October 5, 1976, the net operating loss deduction is not allowed in computing the real estate investment trust taxable income of a qualified real estate investment trust.
-
Treas. Reg. §1.172-10(a)Taxable years to which a loss may be carried.
Taxable years to which a loss may be carried. (1) A net operating loss sustained by a qualified real estate investment trust (as defined in paragraph (b)(1) of this section) in a qualified taxable year (as defined in paragraph (b)(2) of this section) ending after October 4, 1976, shall not be carried back to a preceding taxable year.
(2) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending before October 5, 1976, shall be carried back to the 3 preceding taxable years. However, see § 1.857-2(a)(5), which does not allow the net operating loss deduction in computing real estate investment trust taxable income for taxable years ending before October 5, 1976.
(3) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending after December 31, 1972, shall be carried over to the 15 succeeding taxable years. However, see § 1.857-2(a)(5).
(4) A net operating loss sustained by a qualified real estate investment trust in a qualified taxable year ending before January 1, 1973, shall be carried over to 8 succeeding taxable years. However, see § 1.857-2(a)(5).
(5) A net operating loss sustained in a taxable year for which the taxpayer is not a qualified real estate investment trust generally may be carried back to the 3 preceding taxable years; however, a net operating loss sustained in a taxable year ending after December 31, 1975, shall not be carried back to any qualified taxable year. However, see § 1.857-2(a)(5), with respect to a net operating loss sustained in a taxable year ending before January 1, 1976.
(6) A net operating loss sustained in a taxable year ending after December 31, 1975, for which the taxpayer is not a qualified real estate investment trust generally may be carried over to the 15 succeeding taxable years.
(7)(i) A net operating loss sustained in a taxable year ending before January 1, 1986, for which the taxpayer is not a qualified real estate investment trust generally may be a net operating loss carryover to each of the 5 succeeding taxable years. However, where the loss was a net operating loss carryback to one or more qualified taxable years, the net operating loss, in accordance with paragraph (a)(7)(ii) of this section shall be—
(A) Carried over to the 15 succeeding taxable years if the loss could be a net operating loss carryover to a taxable year ending in 1981, or
(B) Carried over to the 5, 6, 7, or 8 succeeding taxable years if paragraph (a)(7)(i)(A) of this section does not apply.
(ii) For purposes of determining whether a net operating loss could be a carryover to a taxable year ending in 1981 under paragraph (a)(7)(i)(A) of this section or, where paragraph (a)(7)(i)(A) of this section does not apply, to determine the actual carryover period under paragraph (a)(7)(i)(B) of this section, the net operating loss shall have a carryover period of 5 years, and such period shall be increased (to a number not greater than 8) by the number of qualified taxable years to which such loss was a net operating loss carryback; however, where the taxpayer acted so as to cause itself to cease to be a qualified real estate investment trust and the principal purpose for such action was to secure the benefit of the allowance of a net operating loss carryover under section 172(b)(1)(B), the net operating loss carryover period shall be limited to 5 years. However, see § 1.857-2(a)(5).
(8) A qualified taxable year is a taxable year preceding or following the taxable year of the net operating loss, for purposes of section 172(b)(1), even though the loss may not be carried to, or allowed as a deduction in, such qualified taxable year. Thus, a qualified taxable year ending before October 5, 1976 (for which no net operating loss deduction is allowable) is nevertheless a preceding or following taxable year for purposes of section 172(b)(1). Moreover, a qualified taxable year ending after October 4, 1976 (to which a net operating loss cannot be carried back because of section 172(b)(1)(E)) is nevertheless a preceding taxable year for purposes of section 172(b)(1). For purposes of determining, under section 172(b)(2), the balance of the loss available as a carryback or carryover to other taxable years, however, the net operating loss is not reduced on account of such qualified taxable year being a preceding or following taxable year.
-
Treas. Reg. §1.172-10(b)Definitions.
Definitions. For purposes of this section and §§ 1.172-2 and 1.172-5:
(1) The term qualified real estate investment trust means, with respect to any taxable year, a real estate investment trust within the meaning of part II of subchapter M which is taxable for such year under that part as a real estate investment trust, and
(2) The term qualified taxable year means a taxable year for which the taxpayer is a qualified real estate investment trust.
-
Treas. Reg. §1.172-10(c)Examples.
Examples. The provisions of this section may be illustrated by the following examples:
-
Treas. Reg. §1.172-10(d)Cross references.
Cross references. See §§ 1.172-2(c) and 1.172-5(a)(5) for the computation of the net operating loss of a qualified real estate investment trust for a taxable year ending after October 4, 1976, and the amount of a net operating loss which is absorbed when carried over to a qualified taxable year ending after October 4, 1976. See § 1.857-2(a)(5), which provides that for a taxable year ending before October 5, 1976, the net operating loss deduction is not allowed in computing the real estate investment trust taxable income of a qualified real estate investment trust.
-
Treas. Reg. §1.172-13Product liability losses
(a) Entitlement to 10-year carryback—(1) In general. Unless an election is made pursuant to paragraph (c) of this section, in the case of a taxpayer which has a product liability loss (as defined in section 172(j) and paragraph (b)(1) of this section) for a taxable year beginning after September 30, 1979 (hereinafter “loss year”), the product liability loss shall be a net operating loss carryback to each of the 10 taxable years preceding the loss year.
(2) Years to which loss may be carried. A product liability loss shall first be carried to the earliest of the taxable years to which such loss is allowable as a carryback and shall then be carried to the next earliest of such taxable years, etc.
(3) Example. The application of this paragraph may be illustrated as follows:
(b) Definitions—(1) Product liability loss. The term product liability loss means, for any taxable year, the lesser of—
(i) The net operating loss for the current taxable year (not including the portion of such net operating loss attributable to foreign expropriation losses, as defined in § 1.172-11), or
(ii) The total of the amounts allowable as deductions under sections 162 and 165 directly attributable to—
(A) Product liability (as defined in paragraph (b)(2) of this section), and
(B) Expenses (including settlement payments) incurred in connection with the investigation or settlement of or opposition to claims against the taxpayer on account of alleged product liability.
Indirect corporate expense, or overhead, is not to be allocated to product liability claims so as to become a product liability loss.
(2) Product liability. (i) The term product liability means the liability of a taxpayer for damages resulting from physical injury or emotional harm to individuals, or damage to or loss of the use of property, on account of any defect in any product which is manufactured, leased, or sold by the taxpayer. The preceding sentence applies only to the extent that the injury, harm, or damage occurs after the taxpayer has completed or terminated operations with respect to the product, including, but not limited to the manufacture, installation, delivery, or testing of the product, and has relinquished possession of such product.
(ii) The term product liability does not include liabilities arising under warranty theories relating to repair or replacement of the property that are essentially contract liabilities. For example, the costs incurred by a taxpayer in repairing or replacing defective products under the terms of a warranty, express or implied, are not product liability losses. On the other hand, the taxpayer's liability for damage done to other property or for harm done to persons that is attributable to a defective product may be product liability losses regardless of whether the claim sounds in tort or contract. Further, liability incurred as a result of services performed by a taxpayer is not product liability. For purposes of the preceding sentence, where both a product and services are integral parts of a transaction, product liability does not arise until all operations with respect to the product are completed and the taxpayer has relinquished possession of it. On the other hand, any liability that arises after completion of the initial delivery, installation, servicing, testing, etc., is considered “product liability” even if such liability arises during the subsequent servicing of the product pursuant to a service agreement or otherwise.
(iii) Liability for injury, harm, or damage due to a defective product as described in this subparagraph shall be “product liability” notwithstanding that the liability is not considered product liability under the law of the State in which such liability arose.
(iv) Amounts paid for insurance against product liability risks are not paid on account of product liability.
(v) Notwithstanding subparagraph (iv), an amount is paid on account of product liability (even if such amount is paid to an insurance company) if the amount satisifies the provisions of paragraph (b)(2) (i) through (iii) of this section and the amount—
(A) Is paid on account of specific claims against the taxpayer (or on account of expenses incurred in connection with the investigation or settlement of or opposition to such claims), subsequent to the events giving rise to the claims and pursuant to a contract entered into before those events,
(B) Is not refundable, and
(C) Is not applicable to other claims, other expenses or to subsequent coverage.
(3) Examples. Paragraph (b)(2) of this section is illustrated by the following examples:
(c) Election—(1) In general. The 10-year carryback provision of this section applies, except as provided in this paragraph, to any taxpayer who, for a taxable year beginning after September 30, 1979, incurs a product liability loss. Any taxpayer entitled to a 10-year carryback under paragraph (a) of this section in any loss year may elect (at the time and in the manner provided in paragraph (c)(2) of this section) to have the carryback period with respect to the product liability loss determined without regard to the carryback rules provided by paragraph (a) of this section. If the taxpayer so elects, the product liability loss shall not be carried back to the 10th through the 4th taxable years preceding the loss year. In such case, the product liability loss shall be carried back or carried over as provided by section 172(b) (except subparagraph (1)(I) thereof) and the regulations thereunder.
(2) Time and manner of making election. An election by any taxpayer entitled to the 10-year carryback for the product liability loss to have the carryback with respect to such loss determined without regard to the 10-year carryback provision of paragraph (a) of this section must be made by attaching to the taxpayer's tax return (filed within the time prescribed by law, including extensions of time) for the taxable year in which such product liability loss is sustained, a statement containing the information required by paragraph (c)(3) of this section. Such election, once made for any taxable year, shall be irrevocable after the due date (including extensions of time) of the taxpayer's tax return for that taxable year.
(3) Information required. In the case of a statement filed after April 25, 1983, the statement referred to in paragraph (c)(2) of this section shall contain the following information:
(i) The name, address, and taxpayer identifying number of the taxpayer; and
(ii) A statement that the taxpayer elects under section 172(j)(3) not to have section 172(b)(1)(I) apply.
(4) Relationship with section 172(b)(3)(C) election. If a taxpayer sustains during the taxable year both a net operating loss not attributable to product liability and a product liability loss (as defined in section 172(j)(1) and paragraph (b)(1) of this section), an election pursuant to section 172(b)(3)(C) (relating to election to relinquish the entire carryback period) does not preclude the product liability loss from being carried back 10 years under section 172(b)(1)(I) and paragraph (a)(1) of this section.
-
Treas. Reg. §1.172-13(a)Entitlement to 10-year carryback—(1) In general.
Entitlement to 10-year carryback—(1) In general. Unless an election is made pursuant to paragraph (c) of this section, in the case of a taxpayer which has a product liability loss (as defined in section 172(j) and paragraph (b)(1) of this section) for a taxable year beginning after September 30, 1979 (hereinafter “loss year”), the product liability loss shall be a net operating loss carryback to each of the 10 taxable years preceding the loss year.
(2) Years to which loss may be carried. A product liability loss shall first be carried to the earliest of the taxable years to which such loss is allowable as a carryback and shall then be carried to the next earliest of such taxable years, etc.
(3) Example. The application of this paragraph may be illustrated as follows:
-
Treas. Reg. §1.172-13(b)Definitions—(1) Product liability loss.
Definitions—(1) Product liability loss. The term product liability loss means, for any taxable year, the lesser of—
-
Treas. Reg. §1.172-13(c)Election—(1) In general.
Election—(1) In general. The 10-year carryback provision of this section applies, except as provided in this paragraph, to any taxpayer who, for a taxable year beginning after September 30, 1979, incurs a product liability loss. Any taxpayer entitled to a 10-year carryback under paragraph (a) of this section in any loss year may elect (at the time and in the manner provided in paragraph (c)(2) of this section) to have the carryback period with respect to the product liability loss determined without regard to the carryback rules provided by paragraph (a) of this section. If the taxpayer so elects, the product liability loss shall not be carried back to the 10th through the 4th taxable years preceding the loss year. In such case, the product liability loss shall be carried back or carried over as provided by section 172(b) (except subparagraph (1)(I) thereof) and the regulations thereunder.
(2) Time and manner of making election. An election by any taxpayer entitled to the 10-year carryback for the product liability loss to have the carryback with respect to such loss determined without regard to the 10-year carryback provision of paragraph (a) of this section must be made by attaching to the taxpayer's tax return (filed within the time prescribed by law, including extensions of time) for the taxable year in which such product liability loss is sustained, a statement containing the information required by paragraph (c)(3) of this section. Such election, once made for any taxable year, shall be irrevocable after the due date (including extensions of time) of the taxpayer's tax return for that taxable year.
(3) Information required. In the case of a statement filed after April 25, 1983, the statement referred to in paragraph (c)(2) of this section shall contain the following information:
-
Treas. Reg. §1.172-13(i)§1.172-13(i)
The name, address, and taxpayer identifying number of the taxpayer; and
(ii) A statement that the taxpayer elects under section 172(j)(3) not to have section 172(b)(1)(I) apply.
(4) Relationship with section 172(b)(3)(C) election. If a taxpayer sustains during the taxable year both a net operating loss not attributable to product liability and a product liability loss (as defined in section 172(j)(1) and paragraph (b)(1) of this section), an election pursuant to section 172(b)(3)(C) (relating to election to relinquish the entire carryback period) does not preclude the product liability loss from being carried back 10 years under section 172(b)(1)(I) and paragraph (a)(1) of this section.
-
Treas. Reg. §1.172-13(v)§1.172-13(v)
Notwithstanding subparagraph (iv), an amount is paid on account of product liability (even if such amount is paid to an insurance company) if the amount satisifies the provisions of paragraph (b)(2) (i) through (iii) of this section and the amount—
(A) Is paid on account of specific claims against the taxpayer (or on account of expenses incurred in connection with the investigation or settlement of or opposition to such claims), subsequent to the events giving rise to the claims and pursuant to a contract entered into before those events,
(B) Is not refundable, and
(C) Is not applicable to other claims, other expenses or to subsequent coverage.
(3) Examples. Paragraph (b)(2) of this section is illustrated by the following examples:
-
Treas. Reg. §1.172-2Net operating loss in case of a corporation
(a) Modification of deductions. A net operating loss is sustained by a corporation in any taxable year if and to the extent that, for such year, there is an excess of deductions allowed by chapter 1 of the Code over gross income computed thereunder. In determining the excess of deductions over gross income for such purpose—
(1) Items not deductible. No deduction shall be allowed under—
(i) Section 172 for the net operating loss deduction, and
(ii) Section 922 in respect of Western Hemisphere trade corporations;
(2) Dividends received. The 85-percent limitation provided by section 246(b) shall not apply to the deductions otherwise allowed under—
(i) Section 243(a) in respect of dividends received from domestic corporations.
(ii) Section 244 in respect of dividends received on preferred stock of public utilities, and
(iii) Section 245 in respect of dividends received from foreign corporations; and
(3) Dividends paid. The deduction granted by section 247 in respect of dividends paid on the preferred stock of public utilities shall be computed without regard to subsection (a)(1)(B) of Section 247.
(b) Example. The following example illustrates the application of paragraph (a):
(c) Qualified real estate investment trusts. For taxable years ending after October 4, 1976, the net operating loss of a qualified real estate investment trust (as defined in § 1.172-10(b)) is computed by taking into account the adjustments described in section 857(b)(2) (other than the deduction for dividends paid, as defined in section 561), as well as the modifications required by paragraph (a)(1) of this section. Thus, for example, the special deductions for dividends received, etc., provided in part VIII of subchapter B (other than section 248), as well as the net operating loss deduction under section 172, are not allowed in computing the net operating loss of a qualified real estate investment trust.
-
Treas. Reg. §1.172-2(a)Modification of deductions.
Modification of deductions. A net operating loss is sustained by a corporation in any taxable year if and to the extent that, for such year, there is an excess of deductions allowed by chapter 1 of the Code over gross income computed thereunder. In determining the excess of deductions over gross income for such purpose—
(1) Items not deductible. No deduction shall be allowed under—
-
Treas. Reg. §1.172-2(b)Example.
Example. The following example illustrates the application of paragraph (a):
-
Treas. Reg. §1.172-2(c)Qualified real estate investment trusts.
Qualified real estate investment trusts. For taxable years ending after October 4, 1976, the net operating loss of a qualified real estate investment trust (as defined in § 1.172-10(b)) is computed by taking into account the adjustments described in section 857(b)(2) (other than the deduction for dividends paid, as defined in section 561), as well as the modifications required by paragraph (a)(1) of this section. Thus, for example, the special deductions for dividends received, etc., provided in part VIII of subchapter B (other than section 248), as well as the net operating loss deduction under section 172, are not allowed in computing the net operating loss of a qualified real estate investment trust.
-
Treas. Reg. §1.172-2(i)Section 243(a) in respect of dividends received from domestic corporations.
Section 243(a) in respect of dividends received from domestic corporations.
(ii) Section 244 in respect of dividends received on preferred stock of public utilities, and
(iii) Section 245 in respect of dividends received from foreign corporations; and
(3) Dividends paid. The deduction granted by section 247 in respect of dividends paid on the preferred stock of public utilities shall be computed without regard to subsection (a)(1)(B) of Section 247.
-
Treas. Reg. §1.172-3Net operating loss in case of a taxpayer other than a corporation
(a) Modification of deductions. A net operating loss is sustained by a taxpayer other than a corporation in any taxable year if and to the extent that, for such year there is an excess of deductions allowed by chapter 1 of the Internal Revenue Code over gross income computed thereunder. In determining the excess of deductions over gross income for such purpose:
(1) Items not deductible. No deduction shall be allowed under:
(i) Section 151 for the personal exemptions or under any other section which grants a deduction in lieu of the deductions allowed by section 151,
(ii) Section 172 for the net operating loss deduction, and
(iii) Section 1202 in respect of the net long-term capital gain.
(2) Capital losses. (i) The amount deductible on account of business capital losses shall not exceed the sum of the amount includible on account of business capital gains and that portion of nonbusiness capital gains which is computed in accordance with paragraph (c) of this section.
(ii) The amount deductible on account of nonbusiness capital losses shall not exceed the amount includible on account of nonbusiness capital gains.
(3) Nonbusiness deductions—(i) Ordinary deductions. Ordinary nonbusiness deductions shall be taken into account without regard to the amount of business deductions and shall be allowed in full to the extent, but not in excess, of that amount which is the sum of the ordinary nonbusiness gross income and the excess of nonbusiness capital gains over nonbusiness capital losses. See paragraph (c) of this section. For purposes of section 172, nonbusiness deductions and income are those deductions and that income which are not attributable to, or derived from, a taxpayer's trade or business. Wages and salary constitute income attributable to the taxpayer's trade or business for such purposes.
(ii) Sale of business property. Any gain or loss on the sale or other disposition of property which is used in the taxpayer's trade or business and which is of a character that is subject to the allowance for depreciation provided in section 167, or of real property used in the taxpayer's trade or business, shall be considered, for purposes of section 172(d)(4), as attributable to, or derived from, the taxpayer's trade or business. Such gains and losses are to be taken into account fully in computing a net operating loss without regard to the limitation on nonbusiness deductions. Thus, a farmer who sells at a loss land used in the business of farming may, in computing a net operating loss, include in full the deduction otherwise allowable with respect to such loss, without regard to the amount of his nonbusiness income and without regard to whether he is engaged in the trade or business of selling farms. Similarly, an individual who sells at a loss machinery which is used in his trade or business and which is of a character that is subject to the allowance for depreciation may, in computing the net operating loss, include in full the deduction otherwise allowable with respect to such loss.
(iii) Casualty losses. Any deduction allowable under section 165(c)(3) for losses of property not connected with a trade or business shall not be considered, for purposes of section 172(d)(4), to be a nonbusiness deduction but shall be treated as a deduction attributable to the taxpayer's trade or business.
(iv) Self-employed retirement plans. Any deduction allowed under section 404, relating to contributions of an employer to an employees' trust or annuity plan, or under section 405(c), relating to contributions to a bond purchase plan, to the extent attributable to contributions made on behalf of an individual while he is an employee within the meaning of section 401(c)(1), shall not be treated, for purposes of section 172(d)(4), as attributable to, or derived from, the taxpayer's trade or business, but shall be treated as a nonbusiness deduction.
(v) Limitation. The provisions of this subparagraph shall not be construed to permit the deduction of items disallowed by subparagraph (1) of this paragraph.
(b) Treatment of capital loss carryovers. Because of the distinction between business and nonbusiness capital gains and losses, a taxpayer who has a capital loss carryover from a preceding taxable year, includible by virtue of section 1212 among the capital losses for the taxable year in issue, is required to determine how much of such capital loss carryover is a business capital loss and how much is a nonbusiness capital loss. In order to make this determination, the taxpayer shall first ascertain what proportion of the net capital loss for such preceding taxable year was attributable to an excess of business capital losses over business capital gains for such year, and what proportion was attributable to an excess of nonbusiness capital losses over nonbusiness capital gains. The same proportion of the capital loss carryover from such preceding taxable year shall be treated as a business capital loss and a nonbusiness capital loss, respectively. In order to determine the composition (business—nonbusiness) of a net capital loss for a taxable year, for purposes of this paragraph, if such net capital loss is computed under paragraph (b) of § 1.1212-1 and takes into account a capital loss carryover from a preceding taxable year, the composition (business—nonbusiness) of the net capital loss for such preceding taxable year must also be determined. For purposes of this paragraph, the term capital loss carryover means the sum of the short-term and long-term capital loss carryovers from such year. This paragraph may be illustrated by the following examples:
(c) Determination of portion of nonbusiness capital gains available for the deduction of business capital losses. In the computation of a net operating loss a taxpayer other than a corporation must use his nonbusiness capital gains for the deduction of his nonbusiness capital losses. Any amount not necessary for this purpose shall then be used for the deduction of any excess of ordinary nonbusiness deductions over ordinary nonbusiness gross income. The remainder, computed by applying the excess ordinary nonbusiness deductions against the excess nonbusiness capital gains, shall be treated as nonbusiness capital gains and used for the purpose of determining the deductibility of business capital losses under paragraph (a)(2)(i) of this section. This principle may be illustrated by the following example:
(d) Joint net operating loss of husband and wife. In the case of a husband and wife, the joint net operating loss for any taxable year for which a joint return is filed is to be computed on the basis of the combined income and deductions of both spouses, and the modifications prescribed in paragraph (a) of this section are to be computed as if the combined income and deductions of both spouses were the income and deductions of one individual.
(e) Illustration of computation of net operating loss of a taxpayer other than a corporation—(1) Facts. For the calendar year 1954 A, an individual, has gross income of $483,000 and allowable deductions of $540,000. The latter amount does not include the net operating loss deduction or any deduction on account of the sale or exchange of capital assets. Included in gross income are business capital gains of $50,000 and ordinary nonbusiness income of $10,000. Included among the deductions are ordinary nonbusiness deductions of $12,000 and a deduction of $600 for his personal exemption. A has a business capital loss of $60,000 in 1954. A has no other items of income or deductions to which section 172(d) applies.
(2) Computation. On the basis of these facts, A has a net operating loss for 1954 of $104,400, computed as follows:
300 Citing Cases
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the aggregate of the NOL carryovers and carrybacks to the taxable year. See § 172(a). Section 172(c) defines an NOL as the excess of deductions over gross income, computed with certain modifications specified in section 172(d). See Amos v. Comm
2054, 2121–23, made amendments to section 172 that have no application here.
“Unlike ordinary net operating losses, [specified liability] losses have a ten-year carryback period.” Id. at 1258. We ourselves have stated, in a case regarding bad debt losses under prior law, that different losses can have different carryback periods: [G]enerally, the carryback period for a NOL is 3 years and the carryover period is 15 years.[8] Section 172(b)(1)(L) provides a special rule with respect to the bad debt losses of commercial banks: The portion of the NOL of a commercial bank tha
“As a result of subsections (c) and (d) of section 172, the basic category of an individual’s losses that may constitute net operating losses is losses from the conduct of a trade or business.” Laney v.
NOL Deduction Section 172 permits taxpayers to deduct NOLs.
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The NOL amount is the aggregate of the NOL carryovers and NOL carrybacks to the taxable year. I.R.C. § 172(a). Section 172(c) defines an NOL as the excess of deductions over gross income, computed with certain modifications specified in section 172(d). See, e.g., Amos v. Commissione
Section 172 allows a taxpayer to deduct an NOL carryover from earlier years when its taxable income in the current year is more than zero. § 172(a), (b)(2). An NOL is the excess of deductions 2 If a taxpayer is unable to substantiate the amount of a deduction, the Court may nonetheless allow it (or a portion thereof) if there is an evidentiary basi
Scattered, Rumpelstiltskin, and Loop Pursuant to section 172, petitioners must show that (1) the S corporations incurred NOLs in prior years, (2) they had sufficient bases in S corporation shares in those years, (3) no other limitations applied to their realization of the losses, and (4) the losses were properly carried forward to 2008 and 2009.
§ 1366(a)(1).4 Section 172 permits a deduction for the full amount of allowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the current year is not less than zero.
tax year 2008 exceeds the 2010 NOL, and IQH’s 2008 tax year remains open for refund claims because of a mutual agreement to extend the period of limitations; (2) IQH’s net income reported for tax year 2009 8 As in effect for calendar years 2010–13, section 172 provided that an NOL incurred in a given tax year should be carried back (as a deduction) to the two preceding years and, if not fully absorbed, carried forward for up to 20 succeeding years.
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the aggregate of the NOL carryovers and NOL carrybacks to the taxable year. § 172(a). Section 172(c) defines an NOL as the excess of deductions over gross income, computed with certain modifications specified in section 172(d). See, e.g., Amos
NOL Deductions Section 172 permits taxpayers to deduct NOLs.
Although the Beltons argue that an amendment to section 172 permitted them to carry back disaster losses for the five preceding taxable years, that provision applies only to losses arising in 2018, 2019, or 2020.
Section 172 allows a taxpayer to take an NOL carryover from earlier years and an NOL carryback from later years when its taxable income in the current year is more than zero. § 172(a), (b)(2). A taxpayer must, however, elect to carry NOLs forward. Without an election to do so, the Code’s default rule is to apply the NOL to the two preceding years.
General Requirements Section 172 allows a taxpayer to deduct NOLs for a taxable year.
n for acceptance of [petitioner’s] offer in compromise.” The first paragraph of the proposed collateral agreement stated that “any net operating losses sustained for the years 2013 to 2019, in- clusive, shall not be claimed” as NOL deductions under section 172. The fifth paragraph, however, limited the extent of this waiver. It provided: “[T]he agreement amount paid under the terms of the offer in compro- mise [viz., $4,400] and the additional amounts of taxes paid as a result of the waiver of t
Statutory Background and Jurisdiction Section 172 allows a taxpayer to deduct an NOL for a taxable year.
NOL Carryovers Section 172 allows a taxpayer to deduct NOLs for a taxable year.
Section 172 ofthe Internal Revenue Code is federal tax law. It provides a deduction for NOLs. Sec. 172(a) and (b). RA Knighton made preliminary determinations about the types of - 67 - [*67] information she would need to determine the proper carryback ofthe Goldbergs' NOL deductions. These preliminary determinations necessarily required RA Knighto
as unallowable. But their sale ofthe Gearhart property in 2011 gave them reason under section 469(g)(1)(A) to report the previously suspended losses on their return for that year. Petitioners' 2011 return also reflects the rules for NOLs provided in section 172. Under that section, when an individual taxpayer incurs a net loss for a year from business activities, the loss is carried back to offset income ofthe taxpayer for the two prior years. See generally sec. 172. Any NOL remaining after carr
Petitioner argues that because its DPAD was computed as part ofan EAG, section 1.199-7(c)(2), Income Tax Regs., allows petitioner to have NOLs and to carry them back and forward in accordance with - 50 - section 172.33 Respondent argues that only a member ofan EAG which is allocated some or all ofthe EAG's DPAD may take the DPAD into account in its own NOL computation. The regulation does not apply, respondent argues, to an EAG as a whole.
°The TCJA made amendments to section 172 that have no application here.
Net Operating Losses Section 172 allows a taxpayerto deduct NOLs for a taxable year.
1); sec. 1.166-5(a)(2), Income Tax Regs. Business bad debts may be deducted against ordinary income, whether wholly or partially worthless during the taxable year, and may be carried back or forward as part ofthe "net operating loss deduction" under section 172. Sec. 1.166-3, Income Tax Regs. Section 172 permits a deduction for the full amount ofallowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the current year is not less than zero.
Net Operating Loss Section 172 permits a deduction for the full amount ofallowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the current year is not less than zero.
NOL Deduction Section 172 allows a deduction in a taxable year for the full amount of allowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the current year is not less than zero.
56(b); see also Guill v.
r the year immediately preceding the taxable year in which the disaster occurred. Ifsuch an election is made, the casualty will be treated as having occurred in the taxable year for which the loss is claimed. Sec. 165(i)(2). Furthermore, pursuant to sec. 172 an individual may carry back an unused casualty loss as a net operating loss deduction to each ofthe three taxable years preceding the taxable year ofthe casualty. - 15 - [*15] By June of 1995 respondent had commenced an audit ofthe Blacksto
56(b); see also Guill v.
NOL Carryforward and Carryback Deductions Section 172 allows a taxpayerto deduct NOLs for a taxable year.
- 8 - [*8] Section 172 allows a deduction for net operating loss carryovers from earlier years, and net operating loss carrybacks from later years as long as the taxable income for the current year is greater than zero.
ns.3 Petitioners' reliance on these publications is misplaced. The publications that petitioners rely upon discuss deductions allowable under section 691(b) and (c), relating to income in respect ofdecedents, and net operating losses allowable under section 172. Section 691(b) is not pertinent because funeral and estate administration expenses are not specified therein as a 3Petitioners' seriatim answering briefin support ofthe deduction for funeral and estate administration expenses references
- 12 - [*12] Section 172 allows a taxpayerto deduct an NOL for a taxable year.
For the years at issue in United Dominion (i:e.,.1983-1986), section 172 allowed PLLs to be carried back 10 years rather than the 3 years generally permitted for normal NOLs.
Petitioner's Claimed Net Operating Loss Deductions Under Section 172 Defined generally, a net operating loss is the excess ofallowable deductions over gross income for a given tax year.
Section 1402(a)(4) provides that in determining net self-employment earnings, the deduction for net operating losses provided in section 172 shall not be allowed.
Accordingly, we hold that Mr.
er ofdeductions for contributions to section 170(b)(1)(A) organizations that exceed 50% ofthe taxpayer's "contribution base" for the taxable year. The taxpayer's contribution base is his adjusted gross income computed withoutthe deduction allowed by section 172. Sec. 170(b)(1)(G). Petitioner has not shown that he is entitled to a charitable contribution deduction for 2011 in excess ofthe $400 respondent allowed. And he clearly cannot meet the requirements ofsection 170(d)(1)(A) with respect to c
Accordingly, we hold that Mr.
Providing an - 25 - [*25] interpretation ofFederal tax law (such as on the question whether section 172 requires a taxpayerto carry back an NOL deduction one year or two) is neither a ministerial nor a managerial act.
- 9 _ [*9] Section 172 permits a deduction for a taxable year for the full amount of allowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the currentyear is not less than zero.
excess loss, ifany, normally offsets the taxpayer's income for the loss year, and any remaining losses are carried back to the two preceding years and then carried forward to the 20 years following the loss year in accordance with the provisions ofsection 172. In the case ofan S corporation, a partnership, or a grantor trust, the rules prescribed in section 469(g) likewise apply when the entity disposes ofits entire interest in a passive activity. See S. Rept. No. 99-313, at 725 (1986), 1986-3
NOL Deduction Section 172 permits a deduction in a taxable year for the full amount of allowable NOL carrybacks from subsequent years and carryovers from previous years, as long as taxable income for the current year is not less than zero.
Accordingly, we sustain respondent's determination that petitioners had $58,855.82 ofunreported income in 2005.13 VL NOL Section 172 allows a taxpayerto deduct an NOL for a taxable year that equals the sum ofthe NOL carryovers plus NOL carrybacks to that year.
xable years 2000 through 2009. Respondent at trial and in briefcontends that petitioner has not filed any tax 5A taxpayer's contribution base is the taxpayer's adjusted gross income calculated without regard to any nht operating loss carryback under sec. 172. Sec. 170(b)(1)(G). 6Sec. 170(d)(1)(A) requires that the carryovercontribution amount be the lesser of: (i) the amount by which 50 percent ofthe taxpayer's contribution base for such succeeding taxable year exceeds the sum of the charitable
Section 172 allows a taxpayerto deduct an NOL for a taxable year in an amount equal to the sum ofthe NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Unless an election is made, an NOL for any taxable year must first be carried back 2 years and then carried over 20 years. Sec. 172(b)(1)(A). A taxpayer claiming an NOL deduction -32- [*
Additionally, section 172 permits a taxpayer to deduct for the current taxable year an NOL incurred from another year.
for income). When the strict application ofthe annual accounting system results in what may be perceived as an inequitable result, Congress can act to remedy any inequity, as evidenced by the net operating loss carryback and carryoverrules found in sec. 172 and the capital loss carryback and carryover rules found in sec. 1212. - 20 - embodiment ofa systenh ofannual accounting, it is beyond dispute that section 1.152- 2(a)(1), Income Tax Regs., is reasonable and "based on a permissible construct
prior years, and (4) establishing petitioner's share ofany loss or petitioner's basis in the S corporation. All ofthese items would have to be proven by petitioner before any offsets to the admitted unreported income could be allowed. See generally sec. 172; Lehman v. Commissioner, T.C. Memo. 2010-74; McWilliams v. Commissioner, T.C. Memo. 1995-454; sec. 1.172-1(c), Income Tax Regs. Quatman pleaded during his testimony for more time to prepare accurate returns for JRP, acknowledgingthat only "cu
NOL Carryover An NOL is defined in section 172( ) to mean the excess ofallowable deductions over gross income.
Section 172 generally allows taxpayers to deduct net operating loss carrybacks and carryovers. H & M concedes in its posttrial briefthat its net operating loss deduction for 2001 depended entirely on whetherthe note issued to Schmeets represented a valid debt--it says the disallowance ofthe interest deductions eliminates the net operating loss enti
NOL Carryovers Section 172 provides for an NOL deduction.
Section 172 says that an NOL has to be carried back to the 2 taxable years before the loss year and, -11- ifthe loss hasn't been fully absorbed, forward up to 20 years.5 See sec. 172(b)(1). The taxpayer, however, may elect to waive the carryback years. See sec. 172(b)(3). The parties dispute the NOL carryovers the Esrigs reported on their 1998- 20
Section 172(b)(1)(A) generally provides that the , eriod for an NOL carryback is 2 years and that the period for an NOL carryover is 20 years.
or income). When the strict application of the annual accounting system results in what may be perceived as an inequitable result, Congress can act to remedy any inequity, as evidenced by the net operating loss carryback and carryover rules found in sec. 172 and the capital loss carryback and carryover rules found in sec. 1212. We today decide another citizenship test case consistently. Stem v. Commissioner, T.C. Memo. 2012-204. Petitioners apparently concede that, in determining whether the chi
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals'the sum of the NOL carryovers plus NOL carrybacks to that year. See sec. 172(a). Absent an election to the contrary, an NOL for a taxable year "Petitioners also do not dispute respondent's determination that each of the Rowells had a $1,000 bas
rs have substantiated claimed expenses from the Amway activity for 1999 to the extent of gross profit from- the activity; (3) whether petitioners are entitled to deductions for rental property expenses for 1998 and 1999; (4) whether petitioners susta,ined a net operating loss in 2000 that may be 4 carried to one Mr more'òf the years in'issue under section 172; and (5) whether petitioners are liable for an addition to tax for failure to timely file their 1998 Federal income tax return.
But section 172 allows taxpayers to sometimes claim a net-operating-loss (NOL) carryback . Taxpayers with a big NOL in one year may be able to report zero income in that year and use the remaining loss to offset other years' income, possibly even getting refunds of taxes already paid . But not all losses can be carried back . Section 172(d) says that m
ayer's AMTI equals its taxable income as adjusted for certain items. See sec. 55(b) (2). One of those items, specified in section 56(a) (4), allows a corporate taxpayer to claim an ATNOLD in lieu of a net operating loss (NOL) deduction allowed under section 172. II. Section 56(d) (1) Section 56(d) (1) defines the term "alternative tax net operating loss deduction" for purposes of section 56(a) (4). As enacted by the Tax Reform Act of 1986, Pub. L. 99-514, sec. 701(a), 100 Stat. 2320, section 56(
harged in bankruptcy . Petitioners attached to their 1997 tax return.a statement that they intended to deduct the balance. of the $154,946 uncollected judgment over the course of the next 15 years--$11,068 in eac h year--as a loss carryforward under section 172 . On their 2004 joint individual income tax return petitioner s 'claimed an NOL carryforward of $8,098 related to the uncollected 'judgment . Petitioners also claimed a long-term capital loss of .$3,000, which petitioners considered to re
NOL Carryover Section 172 allows a taxpayer to deduct an,NOL for a taxable year.
Discussion Section 172 provides for an NOL deduction .
xpayer’s AMTI equals its taxable income as adjusted for certain items. See sec. 55(b)(2). One of those items, specified in section 56(a)(4), allows a corporate taxpayer to claim an atnold in lieu of a net operating loss (NOL) deduction allowed under section 172. II. Section 56(d)(1) Section 56(d)(1) defines the term “alternative tax net operating loss deduction” for purposes of section 56(a)(4). As enacted by the Tax Reform Act of 1986, Pub. L. 99-514, sec. 701(a), 100 Stat. 2320, section 56(d)(
252 - Section 172 allows a taxpayer to deduct an NOL for a taxable year . The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year . See sec . 172(a) . Absent an election to the contrary, an NOL for a taxable year must first be carried back 3 years and then may be carried forward up to 15 years . See sec . 172
RLI filed that 2001 Form 1120 in June 2002 ; and on November 5, 2002, it filed a Form .1139, Corporation Application for Tentative Refund, in order to carry that 2001 loss back to the years 1999 and 2000 (pursuant to section 172), reduce its tax liability for those earlier years, and obtain the resulting refunds .
Under section 172, NOLs are ordinarily carried back to the two taxable years before the loss year and, if losses have not been fully absorbed, forward to the twenty succeeding years . In general, the taxpayer bears the burden of establishing the actual amount of NOL carrybacks and carryforwards . Keith v . Commissioner, 115 T .C . 605, 621 (2000) . If a
At the outset, we note that section 172 permits taxpayers to carry net operating losses (NOLs) from one taxable year to another, but generally requires that taxpayers first carry such losses back 2 years .
Respondent argues that section 56(a)(4) provides that the ATNOL deduction is allowed in place of the NOL deduction under section 172 ; therefore, the loss limitation rules apply only after any final ATNOL for the taxable year has been determined and after the amount of any carryback of such a loss against the positive taxable income of the same subgro
Respondent argues that section 56(a)(4) provides that the ATNOL deduction is allowed in place of the NOL deduction under section 172; therefore, the loss limitation rules apply only after any final ATNOL for the taxable year has been determined and after the amount of any carryback of such a loss against the positive taxable income of the same subgroup has been determined.
56(d) defines the term “alternative tax net operating loss deduction” as the “net operating loss deduction allowable for the taxable year under section 172” with certain adjustments to the amount of that deduction allowable under sec.
An ATNOL deduction is defined as "the net operating loss deduction allowable for the taxable year under section 172," subject to exceptions and adjustments under section 56(d) .
cted judgment . Petitioners also attached to their 1997 tax return a statement that they intended to deduct the balance of the $154,946 uncollected judgment over the course of the next 15 years -- $11,068 in each year -- as a loss carryforward under section 172 . For 2003, the year at issue herein, petitioners filed a joint Federal income tax .return, reported thereon $6,604 as the taxable portion of the Social Security benefits petitioner received, and claimed the $11,068 loss carryforward ment
Section 172 permits a deduction in a current year for the full amount of net operating loss carrybacks or carryovers from previous years, as long as taxable income for the current year is not less than zero . Sec . 172 (a), (b)(2) . However, net capital losses that are carried forward may be deducted only in later tax years subject to the limitatio
See, e.g., Boyd v. United States, 762 F.2d 1369 (9th Cir. 1985); Offutt v. Commissioner, 16 T.C. 1214 (1951); Heidelberg v. Commissioner, T.C. Memo. 1977-133. One of the consequences to professional gamblers is that the loss carryover provisions of sec. 172 are unavailable for amounts attributable to wagering activity. That is not an issue in this case as Mrs. Tschetschot had other income to absorb her expenses properly deductible as a professional. One of the consequences to nonprofessionals i
An ATNOL deduction is defined as “the net operating loss deduction allowable for the taxable year under section 172,” subject to exceptions and adjustments under section 56(d).
The sole issue for decision is whether petitioner is liable, under section 172(t), for the 10-percent additional tax on an early distribution from petitioner's qualified retirement plan .
on 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
Commissioner, supra, we hold petitioners may not claim an ATNQL carryback to reduce their AMT I for 2000 .
Net Operating Loss Carryforward -- $25,990 Section 172 allows an NOL deduction to a taxpayer equal to the total of the NOL carryforwards and carrybacks to the year.
totaling $2,333,698 in 2000 and $2,985,149 in 2001 . Petitioners claimed a net operating loss for 2001 due to the ordinary securities trading losses . Petitioners seek to carry this net operating loss back to tax years 1996 through 1999 pursuant to section 172 . Petitioners accordingly applied for tentative refunds for 1996, 1997, 1998, and 1999, which respondent disallowed . Petitioners' and SPK's Requests for Letter Rulings Petitioners and SPK both requested that respondent issue letter rulin
Section 172 (c) defines an NOL as "the excess of the deductions allowed by this chapter over the gross income", as modified by section 172(d) . In the case of a noncorporate taxpayer, the amount deductible on account of capital losses cannot exceed the amount includable on account of capital gains . Sec . 172(d)(2)(A) ; Erfurth v . Commissioner , 7
on 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
computation. See, e.g., Parekh v. Commissioner, T.C. Memo. 1998-151. In Merlo v. Commissioner, supra, we stated in pertinent part: 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
Additionally, net operating losses, such as the ones petitioner is claiming, may carryover under section 172 from the year in which they were incurred to another year only if the losses were the result of operating a trade or business within the meaning of section 162(a).
Petitioner, 3(...continued) (C) the deduction for charitable contributions provided in section 170, (D) the net operating loss deduction provided in section 172, (E) the additional itemized deductions for individuals provided in part VII of subchapter B (section 211 and following), and (F) the deduction for depletion under section 611 with respect to oil and gas wells.
Brooks Foods owed Egan Oil more than the $158,381 claimed and that it is irrelevant when petitioner claimed the deduction because the deduction would have resulted in a net operating loss that petitioner could have carried backward or forward under section 172. Sec. 172(b)(1)(A). On this basis, petitioner also argues that the accuracy-related penalty should not be imposed. We address each issue in turn. We begin with the burden of proof. I. Burden of Proof In general, the Commissioner’s determi
170(b)(1)(F) defines contribution base to mean "adjusted gross income (computed without regard to any net op.erating loss carryback to the taxable year under section 172)." - 13 - in excess of $500 for a noncash contribution, the taxpayer must maintain written records that also indicate how the property was acquired, and the cost or adjusted basis of the property.
Accordingly, we hold that petitioners did not satisfy the requirements under section 172(b)(3) for making a valid election to waive the NOL carryback period.
ated handwritten note that petitioner alleges was attached - 8 - to amendment No. 1 was consistent with the amount on the timely filed Form 1040X and the revised Form 1040 attached to it. Neither handwritten note, however, claimed an election under section 172. It has been held that "at the very least, an election under section 172 must correctly cite section 172." Powers v. Commissioner, 43 F.3d 172, 177 (5th Cir. 1995). The Court is not convinced that petitioner either literally or substantial
Petitioner reasons that the Estate succeeds solely to the debtor’s net operating loss carryovers under section 172 “determined as of the first day of the debtor’s taxable year in which the case commences”.
.R.C., occurred upon the confirmation of the plan and discharge of the debtor. 2. Held, further, P may use NOLs with respect to his separate tax reporting in the year of the commencement of his bankruptcy and later years, to the extent allowed under sec. 172, I.R.C., and the regulations thereunder. Oren L. Benton, pro se. Frederick J. Lockhart, Jr., and John A. Weeda, for respondent. OPINION GERBER, Judge: Respondent determined deficiencies in petitioner’s Federal income taxes, an addition to ta
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a); see also sec. 172(c) (NOL defined) and (d)(4)(C) (special rule as to casualty or theft losses allowable under section 165(c)(2) or (3)). Absent an election to the cont
In the case of NOLs, the bankruptcy estate succeeds to the NOLs as determined under section 172, as of the first day of the individual debtor’s taxable year in which the case commences.
Accordingly, we find that petitioner is not entitled to an NOL deduction under section 172 for the taxable year 1998 in excess of that allowed by respondent.
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Absent an election to the contrary, an NOL for any taxable year 2 The parties agree that sec. 7491(a) is inapplicable in this case, as the examination began before the
172 provides specific rules allowing NOLs to be carried back to preceding taxable years and carried forward to future years to reduce a taxpayer’s taxable income.
NOL Deduction Section 172 allows a taxpayer to deduct an NOL for a taxable year.
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Absent an election to the contrary, an NOL for any taxable year must first be carried back 3 years and then carried over 15 years. Sec. 172(b)(1)(A), (2), and (3).4 A
Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Absent an election to the contrary, an NOL for any taxable year 2 The parties agree that sec. 7491(a) is inapplicable in this case, as the examination began before the
1.1502-21, Income Tax Regs. To give effect to its calculations, petitioner applied for and received a tentative carryback and refund adjustment pursuant to section 6411. Thus, when petitioner filed the application for tentative carryback adjustment, it substantively - 64 - recomputed the group’s tax liability for 1981 and 1984. Had
172 provides specific rules allowing NOLs to be carried back to preceding taxable years and carried forward to future years to reduce a taxpayer’s taxable income. Sec. 172(a) allows as a deduction for the taxable year an NOL carryback. If the amount of tax is reduced by reason of an NOL carryback, the reduction in tax does not affect the compu
rally deduct an NOL carryover for up to 20 years from the tax year of the loss. Sec. 172(b)(1)(A). It is not clear from the record how or when the loss was sustained, how the NOL carryover was computed, or whether the NOL was computed properly under section 172. Petitioner’s 1991 return does not reflect the NOL available to be carried forward; nevertheless, even if it properly reflected the NOL available to be carried over, submission of the return is not sufficient evidence of the claimed loss.
Section 56(d), in turn, defines the ATNOL deduction as the NOL deduction determined for regular tax purposes under section 172 (i.e., NOL carryovers plus carrybacks), adjusted as provided in sections 56, 57, and 58, but not to exceed 90 percent of AMTI.
The following table, as set forth in respondent’s Answer to Amended Petition, shows the particular assets and 3 This table, as set forth in respondent’s Answer to Amended Petition, reflects certain adjustments to the net worth analysis upon which the notice of deficiency was predicated, as discussed in more detail, infra. - 7 - liabiliti
arket value. Sec. 165(b). In general, a loss resulting from worthless stock is deductible only in the year the stock becomes worthless,12 see sec. 165(g)(1), and does not enter into the computation of net operating loss carrybacks and carryforwards, sec. 172. Even if we accepted petitioner’s vague and unsupported allegations of value, petitioner offered no evidence to show his adjusted basis in the stock, or when the stock became worthless. Likewise, there is no evidence in the record of a stock
Obviously, 4 Petitioner does not dispute that the first and second requirements are met. Petitioner is attempting in substance to reopen closed years. - 17 - the second of these points was not decided in Allnutt I. However, the first point was decided: we decided that he had taxable income in the 1981-86 years. Thus, he did not have loss
Accordingly, petitioner has not shown that he is entitled to deductions under section 172 for taxable years 1992 and 1994.
led under section 162 or 212(2) to deduct on Schedule E, Supplemental Income and Loss, expenses with respect to their two purported rental properties for 1992 and 1993 and, if so, in what amounts; (4) whether petitioners are entitled to deduct under section 172 certain net operating losses they had computed with respect to 1990 and 1991 and carried forward to 1992 and 1993 and, if so, in what amounts; (5) whether petitioners are liable under section 6662(a) and (b)(1) for accuracy-related penalt
We begin first with section 172, which sets out in detail the procedures to be used in computing the amounts allowable as NOLs and in determining the years to which an NOL may be carried.
Section 56(d), in turn, defines the ATNOL deduction as the NOL deduction determined for regular tax purposes under section 172 (i.e., NOL carryovers plus carrybacks), adjusted as provided in sections 56, 57, and 58, but not to exceed 90 percent of AMTI.
With respect to petitioner’s contention that respondent erred in disallowing the NOL deduction, section 172 allows a deduction for an NOL for the taxable year in an amount equal to the NOL carried back to the taxable year and the NOL carried forward to the taxable year.
With no evidence of a net operating loss in 1994, we hold that petitioner is not entitled to a deduction for a net operating loss carryover in any of the years in issue.
Reimbursement 75,120 Total gross receipts 115,870 Less: cost of goods sold -75,120 Gross profit/gross income 40,750 Less: reported gross profit/gross income -44,163 Overreported gross profit/gross income (3,413) In view of the foregoing, we sustain respondent’s income determination for 1995 in that we hold that petitioner received unreported gross income for that year in the amount of $29,606.
Commissioner, supra, the Court of Appeals held that Intermet Corporation and its subsidiaries (hereinafter petitioner) is eligible to carry back for 10 years pursuant to section 172(b)(1)(C), certain expenses, i.e., State tax liabilities and interest on Federal and State tax liabilities, provided that those expenses qualify as “specified liability losses” within the meaning of section 172(f)(1)(B).
172 allows a deduction for a net operating loss (NOL), which may be carried back to years preceding the year of the loss and carried over to years following the year of the loss. Sec. 172(b). The item here in dispute is described as a “carry forward loss credit”. If petitioner intended, albeit inartfully, to deduct an NOL carryover, the deduct
ce of deficiency. We agree with respondent that all these adjustments and concessions should be taken into account. When that is done, it is clear that there are no losses in 1990 and 1992 that are available to be carried forward to 1993 pursuant to section 172. V. Issue 5. Casualty Loss A. Background On October 2, 1991, petitioner’s son Brian Tietig, who was 17 years old at the time, discovered that a theft and extensive vandalism had occurred at the Miami property. Brian Tietig called the Metr
Therefore, the loss could only be used by petitioners as a section 172 net operating loss (NOL) carryover or capital loss carryover during the years in issue, depending on the character of the loss.
s were capital 5 Petitioners claim they are entitled to a bad debt deduction in 1990 with respect to funds they advanced to HPD. Petitioners assert that the bad debt deduction created a net operating loss, which they seek to carry back to 1989 under sec. 172. We have jurisdiction over those items in years that bear on a taxpayers’ tax liability for the year at issue. See sec. (continued...) - 16 - contributions. Petitioners argue that they were loans and that they are entitled to a $357,557 bad
Section 172 In general, section 172 allows a deduction for an amount equal to the aggregate of the net operating loss carryover to a taxable year plus the net operating loss carryback to that year. Sec. 172(a). Section 172(b), as in effect for the year in issue, required that a net operating loss first be carried back to each of the 3 previous taxa
ners’ statement is that they referred to section 172(B)(3) instead of section 172(b)(3). The use of the upper case “B”, however, does not create confusion as to their intentions or as to other possible alternatives that may have been available under section 172. In all other respects, the statement made by petitioners, as part of their 1994 return, meets the statutory and regulatory requirements. Several cases have considered the effectiveness of taxpayers’ elections to waive NOL carrybacks. It
In general, section 172 allows a deduction for an amount equal to the aggregate of the net operating loss carryover to a taxable year plus the net operating loss carryback to that year.
In general, section 172 allows a deduction for an amount equal to the aggregate of the net operating loss carryovers to a taxable year plus the net operating loss carrybacks to that year.
exceed 50 percent of the taxpayer's contribution base for the taxable year." Sec. 170(b)(1)(F) defines the term "contribution base" to mean adjusted gross income (computed without regard to any net operating loss carryback to the taxable year under sec. 172). - 10 - Section 1.170A-13(a), Income Tax Regs., provides that, if a contribution of money is made in a taxable year beginning after December 31, 1982, the taxpayer shall maintain, for each contribution, one of the following: (1) A canceled
We have previously analyzed these statutory and regulatory requirements under section 172 in Young v.
raft and business investments. Thus, petitioner claims there were resulting net operating losses which reduce his tax liabilities. Petitioner has the burden of proving both the right to and the amount of the net operating loss deductions pursuant to section 172. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, - 37 - 115 (1933). The taxpayer's burden of establishing his entitlement to a net operating loss deduction includes the burden of substantiation. See Hradesky v. Commissioner, 65 T.C. 87
The language of section 1371(b) ("No carryforward, and no carryback") is broad, unlike that of other sections which specify certain types of carryforwards and carrybacks. See supra note 4. The legislative history of section 1371(b) supports a broad 4 See, e.g., sec. 170(d)(1) and (2) (charitable contributions); sec. 38(a) (business credit carryforwards and carrybacks); sec. 172 (net operating loss carryovers and carrybacks); sec.
Commissioner, supra, are readily distinguishable from the instant case.13 Although neither case 12 As discussed infra, because we conclude that the deductions for the taxes and interest in issue were not taken into account in the computation of the group's CNOL, we do not consider whether the deductions for taxes and interest otherwise qualify as SLL within the meaning of sec. 172(f).
For example, in 1994, ESI could have offset its $701,162 capital gain by the $33,547 NOL carryover (if the gain had been recognized). - 15 - We have considered all other arguments made by the parties and found them to be either irrelevant or without merit. To reflect the foregoing, Decision will be entered under Rule 155.
isbursements, the estate had a net operating loss (NOL) that he may carry over to his 1991 and 1992 individual income tax returns. Upon the termination of a bankruptcy estate, the debtor succeeds to its tax attributes, including NOL carryovers under section 172. Sec. 1398(g)(1), (i). Deductions available to the estate are not available to the individual debtor. Smith v. Commissioner, T.C. Memo. 1995-406. Petitioner argues that the disbursements by the chapter 11 trustee generated a net operating
- 63 - * * * * * * * (d) Determination of Taxable Income.--For purposes of this section, taxable income of the corporation shall be determined under section 63(a) without regard to-- (1) the deduction allowed by section 172 (relating to net operating loss deduction), and (2) the deductions allowed by part VIII of subchapter B (other than the deduction allowed by section 248, relating to organization expenditures).
Net Operating Loss Section 172 allows a taxpayer to deduct net operating losses.
Did the Laniers receive a constructive dividend as a result of the Corporation's $13,000 transfer to their son's election campaign committee? We now turn to whether the Laniers received a constructive dividend in the amount of $13,000 on account of the Corporation's transfer of that sum to Vance E. Lanier, Inc., on September 2
Did the Laniers receive a constructive dividend as a result of the Corporation's $13,000 transfer to their son's election campaign committee? We now turn to whether the Laniers received a constructive dividend in the amount of $13,000 on account of the Corporation's transfer of that sum to Vance E. Lanier, Inc., on September 2
Accordingly, petitioner has not shown that he is entitled to deductions under section 172 for any of the years before the Court.
Petitioner’s ability to deduct any portion of the 1988 or 1989 legal payments is governed by the section 172 net operating loss provisions.
As to the remaining issue, i.e., the deductibility of the NOL, section 172 allows a taxpayer to deduct an NOL equal to the sum of NOL carryovers plus NOL carrybacks to that year.
A review of section 172 and the consolidated return regulations reveals that a member with separate taxable income cannot contribute to the group’s CNOL.
cess net passive income under sec. 1375. See infra pp. 58-59 for a discussion of the impact of other provisions of sec. 1371(b). See, e.g., sec. 170(d)(1) and (2) (charitable contributions); sec. 38(a) (business credit carryforwards and carrybacks); sec. 172 (net operating loss carryovers and carrybacks); sec. 904(c) (foreign tax credit); sec. 1212 (capital loss carrybacks and carryovers); sec. 1374(b)(2) and (3) (net operating loss carryforward, capital loss carryforward, and business credit ca
— For purposes of this section, taxable income of the corporation shall be determined under section 63(a) without regard to— (1) the deduction allowed by section 172 (relating to net operating loss deduction), and (2) the deductions allowed by part VIII of subchapter B (other than the deduction allowed by section 248, relating to organization expenditures).
Loss From Trade or Business As a result of subsections (c) and (d) of section 172, the basic category of an individual’s losses that may constitute net operating losses is losses from the conduct of a trade or business.
Petitioner contends, and respondent concedes, that if petitioner is entitled to a business bad debt deduction in 1986, then he is entitled to carryback the resulting NOL pursuant to section 172 to the taxable year 1984, the year in issue.
Section 172 allows a taxpayer to deduct net operating losses. Petitioners bear the burden of proving that they had net operating losses in 1990 and 1991. Rule 142(a); United States v. Olympic Radio & Television, Inc., 349 U.S. 232, 235 (1955). Petitioners must prove the amount of the net operating loss carryback. Sec. 172(c); Jones v. Commissioner,
3 Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Absent an election to the contrary, an NOL for any taxable year must first be carried back 3 years and then forward 15 years. Sec. 172(b)(1)(A), (2), and (3). - 13 -
he amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,9332 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. 2 Petitioners concede that they may not deduct $29,000 of this amount. Thus, the amount in dispute is $2,447,933. 8 The following losses are in dispute: Acctg fees re: Acctg fees re: Prof. Tax audited financial employee benefits fees year
he amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,9332 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. 2 Petitioners concede that they may not deduct $29,000 of this amount. Thus, the amount in dispute is $2,447,933. 8 The following losses are in dispute: Acctg fees re: Acctg fees re: Prof. Tax audited financial employee benefits fees year
3 Section 172 allows a taxpayer to deduct an NOL for a taxable year. The amount of the NOL deduction equals the sum of the NOL carryovers plus NOL carrybacks to that year. Sec. 172(a). Absent an election to the contrary, an NOL for any taxable year must first be carried back 3 years and then forward 15 years. Sec. 172(b)(1)(A), (2), and (3). - 13 -
he amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,9332 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. 2 Petitioners concede that they may not deduct $29,000 of this amount. Thus, the amount in dispute is $2,447,933. 8 The following losses are in dispute: Acctg fees re: Acctg fees re: Prof. Tax audited financial employee benefits fees year
Respondent's disallowance of the claimed 1975-NOL carryforward deductions was based on the argument that, under section 172 as applicable to 1975, the period for carrying forward the 1975-NOL expired on December 31, 1980.
he amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,9332 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. 2 Petitioners concede that they may not deduct $29,000 of this amount. Thus, the amount in dispute is $2,447,933. 8 The following losses are in dispute: Acctg fees re: Acctg fees re: Prof. Tax audited financial employee benefits fees year
he amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,9332 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. 2 Petitioners concede that they may not deduct $29,000 of this amount. Thus, the amount in dispute is $2,447,933. 8 The following losses are in dispute: Acctg fees re: Acctg fees re: Prof. Tax audited financial employee benefits fees year
the amount of net operating losses reported on those returns. Respondent determined that petitioners may deduct $4,007,551 as specified liability losses and $2,476,933 as a loss subject to the general 3-year carryback and 15-year carryforward under section 172. The following losses are in dispute: Petitioners reported that they had losses on their 1989, 1990, 1991, and 1992 returns, part of which petitioners carried back as specified liability losses under section 172(b)(1)(C) to the year endin
Net Operating Loss Carryforward Section 172 allows a taxpayer to deduct net operating losses.
(For purposes of this subpara-graph, a net operating loss deduction under section 172 is not a deduction the amount of which may be subject to a limitation computed upon the amount of taxable income.) [Sec.