Metro One Telecommunications, v. CIR, No. 11-70819 (9th Cir. 2012)
Annotate this CaseIn this case, Metro disputed the determination of a deficiency by the Commissioner based on Metro's use of net operating losses (NOLs) accumulated in 2003 and 2004 to completely offset its 2002 taxable income. The court held that the plain meaning of the term "carryovers" prevented taxpayers from using NOLs that were carried back to 2001 or to 2002 from a later tax year to take advantage of section 56 of the Internal Revenue Code (the Relief Rule), which permitted taxpayers subject to the Alternative Minimum Tax to offset up to 100% of their taxable income with NOLs. Therefore, the court affirmed the Tax Court's assessment of a deficiency, because Metro could not take advantage of the Relief Rule with NOLs it carried back from the 2003 and 2004 tax years to 2002.
Court Description: Tax. The panel affirmed the Tax Court’s judgment that Metro One Communications was not entitled to tax relief under § 56 of the Internal Revenue Code (“the Relief Rule”), which permitted taxpayers subject to the Alternative Minimum Tax to offset up to 100% of their taxable income with net operating losses. The panel held that the term “carryovers” as used in the Relief Rule means net operating losses that are carried forward from a tax year to a later tax year. Therefore, Metro One Communications cannot use net operating losses that are carried back to 2001 or 2002 from a later tax year to take advantage of the Relief Rule.
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