Hillenga v. Dept. of Rev.
Annotate this CaseFor the 2006 tax year, taxpayers Mike and Sheri Hillenga claimed, among other things, a deduction based on a net operating loss carryover from their 2004 tax return. The Department of Revenue challenged the 2006 deduction, contending that taxpayers did not actually have a net operating loss in 2004 that could be applied against their 2006 taxes. The Tax Court held that the department could not challenge the 2004 deductions that resulted in the net operating loss carryover, because the 2004 tax year was closed by the statute of limitations. The department appealed. On appeal, the Supreme Court agreed with the department: by attempting to carry over their 2004 net operating loss to apply against their 2006 tax liability, taxpayers put the validity of their 2004 net operating loss at issue. Because the department was not trying to assess a deficiency for 2004, the statute of limitations did not apply.
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