§172 — Net operating loss deduction

“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

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 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).

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.

Accordingly, we hold that Mr.

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.

NOL Carryovers Section 172 provides for an NOL deduction.

Discussion Section 172 provides for an NOL deduction .

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 .

Commissioner, supra, we hold petitioners may not claim an ATNQL carryback to reduce their AMT I for 2000 .

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.

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.

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).

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.

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

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

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.

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

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.

- 12 - year, or that it was carried forward to 1992 and 1993 in accordance with the requirements of section 172.11 Accordingly, petitioners have not established their entitlement to the loss carryforwards from previous years as reflected on their 1992 and 1993 returns.

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

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

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

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

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

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.

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

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

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

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

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.

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.

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

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

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

2054, 2121–23, made amendments to section 172 that have no application here.

“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

§ 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

°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.

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

- 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

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.

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

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.

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

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.

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

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.

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

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.

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

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

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

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.

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

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

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.

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.

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).

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 -

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 -

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.

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.