In Uncategorized on 02/24/2021 at 15:55

Ex-Ch J Michael B (“Iron Mike”) Thornton plays Sherlock in today’s mystery story.

George Farley, Docket No. 115-17, filed 2/24/21, is fighting about a NOL which IRS claims was legit but which George exhausted years before the years at issue. George, a retired CPA with a never-give-up attitude, reprises said NOL in various amounts and guises (claiming a capital loss carry over (CLCO) resurrects a used NOL), but, contrary to the typecast CPA, has no calculations or computations.

One would expect mathematical and arithmetical arabesques. Especially since George got a continuance of his trial back in 2019 to consult with counsel. Lo and behold (as a late and much-lamented colleague used to say), George gets no fewer than four (count ’em, four) attorneys on board, including without limitation the Boss of The Jersey Boys. All four bail in less than two months.

You can see George is confronting “a bumping pitch and a blinding light/An hour to play and the last man in.”

George, alas, goes down swinging.

“It is unclear whether petitioner means in this proceeding to press the argument suggested by the attachment to his 2009 return, i.e., that his claimed 2011 NOL carryover results in some ill-defined manner from a freeing up of previously utilized pre-2009 NOLs as the result of a previously unreported CLCO. The record shows, however, that petitioner never reported any capital loss carryover on any of his returns for taxable years 1997 through 2008, although he did report and exhaust all available NOL carryovers for those earlier years. Consequently, insofar as petitioner’s claimed 2011 NOL carryover is based on the hypothetical application of CLCOs to unspecified years before 2009 and the resulting alleged restoration of previously exhausted NOL carryovers, his reporting positions are riddled with inconsistencies. Moreover, insofar as petitioner means to suggest that NOL carryovers and CLCOs can be used interchangeably such that a later-claimed CLCO can free up previously utilized NOL carryovers under section 172, his argument lacks legal basis. Net capital losses are not interchangeable with NOLs under section 172 but instead are governed by a separate carryover regime under section 1212.

“Petitioner has set forth no facts and submitted no documentary evidence to show that he is entitled to any NOL carryover for 2011. In fact, he has repeatedly represented to the Court that he has no additional documentation.” Order, at pp. 8-9. (Footnotes omitted).

George also gets an uncontested Section 6651(a)(1) add-on.


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