F OR P UB LIC AT ION


### U N I TED STA TES C O U R T O F A PPEA LS F O R T H E N IN T H C IR C U IT

M ETR O O NE T EL EC OMMUNI C ATI ONS , I NC ., Petitioner-Appellant ,

v.
C O M M I SSI O N ER O F I NTERNAL R EV EN UE , Respondent- Appellee

. No. 11-70819

Tax Ct . No. 12651-07

OPI NI ON

Appea l from a De cision of the United States Tax Court Argued and Submitted October 12, 2012—Portland, Oreg on
Filed De cembe r 19, 2012
Be fore : Ba

rry G. Silverman, Richar d R. Cli fton,
and N. Rand y Smith, Cir c uit

Judg e s. Op ini on by Judg e N. R. Sm ithM ETR O O NE V

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2

T hi s s ummary cons t i t ut es n o part of t he op i ni on of

t he cour t

. I t ha s * b een p repa red b y co urt s t af f f o r t he co nveni ence o f

t he read er. SUMMAR

Y *

Tax The pa nel af firmed the Tax Court’s judgme nt that Metro One Communications was not entitled to tax relief under § 56 of the Interna l Re venue Code (“the Relief Rule”), w h i ch permitted t axpay ers subjec t to the Alternative Minimum Tax to offset up to 100% of their tax ab l e income with net operating losses. The pa nel held that the ter

m “ca rryovers” as used in the Relief Rule mea

ns net op er ati nglosses that are car ried forwa rd fr om a tax y ear to a later tax y ear . There fore , Metro One Communications cannot use net operating losses that a re car ried ba ck to 2001 or 2002 fr om a later tax y ea r t o take advanta g e of the Relief Rule.

CO UN SEL
Neil D. Kimm elfield, L ane Powe ll PC , Portland, Oreg on, for Pe tit ion e r- Ap pe lla

nt. Gilbert S. Rothenberg , ActingDeputy Assistant Attorney Gene ral; Bethany B. Hauser (brief ed and argued) a

nd Richard Fa rber (brief ed), Tax Division, United S tates De partment of J ustice, Washington, D.C., for Respondent-Appe llee.M ETR O O NE V

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W e re fer to the I n te r n a l R e v e n u e C o d e a s “I.R .C .” o r “th e C o d e .” 1 F u rth e r, a ll c itatio n s to “I.R .C .” o r “§ ” a r e to the C o d e , co d ifi e d a t T itl e 26 , U ni t ed St at es Co de.

T y pi c a l l y , t h e a mo u n t of t h e de du c t i on f

or NO Ls t h a t a t a x pay er 2
su b je c t t o the A M T is ab le to c la im is l im ited to 9 0 % o f t h e tax p a ye r’s ta x a b le inc o m e
. See § 56 (d)(1)(A )( i )( II ).

OP IN ION
N.R. SMI TH, Circuit J udg e:
B e tw e e n2 0 0 2 an d

2 0 0 9 , § 5 6 o f

th e In te r n a l Re venue Code pr ov ide d tax re lie f b y pe rm itt ingtaxpay e rs su

bjec t to 1 the Alternative Minimum Tax (AMT) to offse t up to 100% of their tax able income with net operating losses (N OL s). To 2 qualify for this relief

, NOL s had to be (1) “ca

rryovers to” the 2001 or 200 2 t ax y ear s, or (2) “ car ried ba ck fr om” the 2001 or 2002 y ear s to a prior tax y ea r. T he plain mea ning of the term “c arr

y overs” preve nts tax p ay ers f rom using N OL s that
are car ried back to 200 1 o r t o 2 00 2 f ro m a late r t a x y e ar t o take a dvantage of the Relief Rule. There fore , we a ffirm the Tax Court’s assessment of a de ficie n cy , beca use Metro O ne Telec ommunications may not t ake a dvantag e of the Relief Rule with NOL s it carr ied bac k from t he 2003 and 2004 tax y ear s to 2002.
I. F acts
Me tr o O ne Te le c omm

un ic atio ns wa s a com

pa ny ba se d in Be aver ton, Oreg on that operated ca ll center s throug hout the United States. In this c ase, Me tro disputes the deter mination of a defic iency by the C ommissi oner of the Interna l RevenueM ETR O O NE V

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T h e AM T i s i mpos ed t o t h e ex t en t t h at t h e amount d et erm i ned t o be 3 the “ te n ta tive m inim u m tax ” e x c e e d s the a m o u n t o f t h e “re g u la r ta x .” § 55 (a).

T he T ax C our t r eac hed i t s deci s i on wi t hout a t r i al , bas ed on s t i pul at ed 4 fac ts a n d e x h ib its. See T ax Ct

. R. 122. Service based on Metro’s use of NOL s acc umulated in 2003 and 2004 to completely

offse t its 2002 t axable income.
For the 2002 tax y ear , Metro was subject to the AMT. In 3 2004, Metro cla imed a re fund for 2002 by offse tting 100% of its 2002 tax able income wi t h NOL s that it had acc umulated in 2003 and 2004. In response , the Commi ssioner sent Metro a Notic e o f Deficienc y

in the amount of $630,159. Metro the n fi le d a pe tit ion wi th the Un ite d State s Tax Co urt. Ag ree ing w ith the Comm issi o n er , the cour t imposed the
am o un to f

th e d e f i c i e n c y. Metro then a

ppeale d. 4

II. Stand ard of Review
We review“the Tax Court’s int erpr etation of the Interna l Revenue Code . . . de novo.” Adkiso n v. Co mm ’r , 592 F.3d 1050, 1052 (9th Cir. 2010).

III
. Ana lys is
A. Bac kgr ound
We d et er m ine her e whe ther a taxpay er, subjec t to the AMT in 2002 may (under the applica ble ver sion of the Code) reduc e its income tax li ab i l i t y by claiminga deduc tion for NOL s t h at arose in later year s. Section 172 of the Code pe rm its taxpay e rs to d e du c t NOL s fr om ta xab le inc ome a s aM ETR O O NE V

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net oper atingloss d ed u ct i o n (NOL D). I .R.C. § 172(a). A “net ope ratingloss” arises in a given tax y ear , if the sum of the taxpay er’ s deductions in that y ear exceeds the amount of the taxpay er’ s tax able i n come. § 172(c). F urther, § 172 permits taxpay ers to apply NOL s that arise in a

g iven tax y ear as deduc tions in ot her tax y ear s. See§ 172(b)( 1)(A)

. Re le va nt h e re , § 17 2( b) (1 )( A) sp e c if ie s th at: a net ope ratingloss for any taxable y ear

– (i) shall be a ne t operating loss car ry back to e ach of the 2 taxable y ear s prec eding t h e t axable y ear of such loss, and (ii) shall be a net operating loss carr y over to e ach of the 20 taxable y ea rs following the taxable y ear of the los s.
Acc ordingto this parag raph, a “ca rry back” is any

NOL that is “ c arr ie d” to o ne of

the 2 ye ars pr e c e ding th e tax y e ar i n which the loss arises. Conversely , a “c arr y over” (sometimes called a “ca rry forwa rd”) is any NO L t h at is “ca rried” to one of the 20 y e ars fo llo wi ngth e taxab le y e ar i n whic h th e los s arises. F or a g iven tax y ear , the amount of the N OL D is the sum of the amount of NO Lcar ry backs plus the amount of NOL car ryovers that a

re c arr ied to that y ear . § 172(a)

. I f a tax pa y e r i s su bje c t to the AM T, the taxpay e r m us t claim an a lternative tax net oper ating loss deduction (ATNO L D) instead of

the NOL D per

mitted b y

§ 172.M ETR O O NE V

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6

T h e v er s i on of

§ 56( d) t h at appl i es t o M et r o i n t h i s ca s e i s t h e v er s i on 5 of § 56 a s e n ac t ed by t h e Job Cr ea t i on a nd W or k er As s i s t an ce Act of 2 0 0 2 , P ub. L. 107- 147, § 102( c) ( 2002) a n d a men ded by t h e W or k i ng Fa m i l i es T ax R el i ef

A ct of 2 0 0 4 , P ub

. L. 1 0 8

- 3 1 1 , § 4 0 3 (b) (20 0 4 ). U nl ess other wi se i nd i cat ed , al l ci t at i o ns t o I. R

. C

. § 5 6 ref er t o t hat vers i o n, w h ic h w e re fer to (fo r th e s a k e o f co n v e n ie n c e ) a s the “R e lief R u le ,” bec au s e i t pr ov i ded t ax re l i ef by per mi t t i n g AM T t ax pay er s t o u s e N O Ls t o re duce t hei r t ax l i abi l i t y
. Ref er enc es t o t he “ ori gi nal ” R el i ef Rul e r ef er t o t he ver s i on of

t he R ul e e nac t ed by t he Job C r eat i o n and W ork er A s s i s t anc e Act of 20 02 , un amended by t he W ork i ng Fami l i es T ax R el i ef A c t o f 2 0 0 4 . C o n g r e s s e li m in a te d the R e lief R u le in 2 0 0 9

. S ee i n f ra n ot e 13. § 56(a) (4). Under the Tax Relief Ac t of 2004, § 56(d)( 1) 5 de fi ne d A TN OL D a s: the net oper atingloss deduction allowable f or the t ax able year

under se ction 172, except that– (A ) the amou

nt of su c h d e du c tio n s ha ll not exceed the sum of– (i) the lesser

of– (I ) the amount of such deduction attributable to net ope ratinglosses (other tha n the deduc tion described in c lause (ii)( I )), or

(I I ) 90 perc ent of a lternative minimum taxable income deter mined without reg ard to such de duction, plus (ii) the lesser

of–M ETR O O NE V

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J o b C r e at i o nan d

W o r k e r A s s i s t an c e A c to f 2 0 0 2 , P u b

. L. 107-147, § 102 (c ) (2002) [hereinaf ter Jobs Act of 2002], as amende d by Working Families Tax Relief Ac t of 2004, Pub. L . 108-311, § 403(b) (2004) [here inafter Tax Re l i ef

Act of 2004] (emphasis added) . This section limit s the amount of the ATNO L D that c an b e c la ime d b y a taxpay e r who is subject to the AMT. In g ener al, t his lim it is 90% of the taxpay er’ s alternative mini m u m taxable income (AMTI ), or the amount of NO L s , whicheve r is lesser. Id. § 56 ( d ) ( 1 ) ( A ) ( i)

. O nth e o th e r h an d , un d e r

th e Re li e f

Rule , there is no limit (up to the amount of taxable income) on the amount of t he ATNOL D t hat a taxpay er can claim in a g iven taxable y ear , if those NOL s are car ried from 2001 or 2002 to an ea rlier tax y ear

(“c arr y backs” ), or to 2001 or 2002 from an ear lier tax y ear

(“c arr y overs” ). Id. § 56(d)( 1)(A) (ii). Ultimately , we a ddress he re whether the term “c arr y overs of net ope rat i n g losses” in the Relief Rule include s (1) bo th NOL s that are car

ried t o a later tax y ear

(“c arr y forwa rds”)
a nd N O L s th at ar e c ar r ie d to a p r e c e d in g tax y ear (“c arr y backs” ), or (2) only car

ry forwa rds. Metro argues that “ca rryovers” means both ca

rry forwa rds and c arr

y b ac k s, and there fore it was entitled to use NOL s from 2003 and 2004 as “ca rry backs” to offset 100% o f its tax able income in 2002. The Commissioner disagrees, arguing that, as used in the Re lie f Rul e , “ c arr

y ov e rs ” is a

sy no ny m f or c arr y fo rw ard s, so the amou n t o f the 2002 ATN OL D attributable to NO L s thatM ETR O O NE V

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Metro ca rried ba ck fr o m 2 0 0 3 and 2004 wa s, like any other NOL car ried u n d er § 172, lim ited to 90% of Metro’ s 2002 A M T I. Thus, under th e C ommissi oner’ s interpre tation, Metro would be able to c arr

y back only

$11,182,013.00 of its 2004 NO L s to 20 02 . T hat amou nt w ou ld i nc re a se to $14,332,806.00 under Me tro’s i n terpre tation of the Relief Rule, beca

use the ATN OL D would not be limited to 90% of Me tr o’ s 2 00 2 A MT I . T he re fo re , if Me tr o is c or

re c t, i t w ou ld b e a b l e t o c l a i mana d d i t i o n a l $ 3 , 1 5 0 , 7 9 3

. 0 0 A T N O LD ag ains t its 2002 AMTI , reduc ing its taxable income for that y e ar t o $ 0. 00 . H ow e ve r, the pla in m e anin gof “ c arr y ov e rs ” indicates that the Relief

Rule does not apply

to NOL s that are
car ried ba ck under these c ircumstance s. We theref ore a ffirm the Tax Cour

t.
B. The pl a in m e a ni ng o f c a r r y o v e r s r e fe r s o nl y to item s that are carr ied f

rom an earlier period to a laterone. When interp retinga statute, we must start with the languag e of the statute. W ill i a ms v. Taylor , 529 U.S. 420, 43 1 (2 00 0) . M or e ov e r, “ [i]n th e a bs e nc e of an in dic atio n to the c on tr ary , w or ds in a statut e are a ssume d to be ar t he ir ordinary , contempora

ry , common meaning .” W alters v. Metro. Educ . Enters., Inc. , 519 U.S. 202, 207 (1997) (inter nal quotation marks omitted).
The ter m “ca rryovers” ordinar i l y

and commonly

ref ers only to something that is ca

rried f rom an e arlier

period to a late r o ne —o nly

to c arry for ward s. To a sc e rt a in t he pla in
me anin g of te rm s, we may c on su lt the de fi nit ion s of th os e terms i n popular dictionar ies. Af-Cap, Inc. v . ChevronM ETR O O NE V

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Ove rseas (

Congo) Ltd. , 475 F.3d 1080, 1088 (“When de te rm ini ngthe pla in mea nin gof langua g e , w e may

c on su lt diction ar y

definitions.”). Blac k ’s Law D ic tio na ry de fi ne s a “ca rryover” as “[a]n income-tax deduction (esp. f or a ne t operating loss) that . . . may be take n in a later

period . . . .” Blac k ’s Law D ic tio na ry 24 2 ( 9th

e d. 20 09 ); E l ectrolux Holding, I

nc. v. United States , 491 F.3d 1327, 1328 n.2 ( Fe d. Cir . 2 00 7) (d e fining“ c arr y ov e rs ” in § 12 12 by

re fe re nc e to Black’ s ). L ikewise, W

ebster’s T

h i rd New International Dictionary c on ta ins mul tip le de fi nit ion s o f “ c arr y ov e r,” a ll of which sug g est movement from one period of time to a later period of time. W

ebster’s Third

New International Di c tio na ry 3 4 4 ( 1993) ( e.g. , “to hold over . . . f or anothe r season” ). Courts also commonly employ “ca rryovers” for this meaning

. E

. g

. , Ka n s a s v

. Co lorado , 543 U.S. 86, 102 (2 00 4) ; In re Grand J

ury Sub p o en as Duce

s Tecum , 78 F.3d 13 07 , 1 31 2 n .1 1 ( 8th

Cir . 1 99 6) ; Un ite d Sta te s v . G re go ry , 871 F.2d 1239, 1243 (4th Cir. 1989) (“O f these, 19 w ere new hires and the rema ining 11 wer e car ryovers f rom the pre vious administration.”); Ho ots v . P e nn sy lv an ia , 6 72 F.2d 1124, 1129 (3d Cir. 1982). None of these de fi n i t i o ns or usag es sug g est that the ordinar y meaning of “c arr

y over” encompa sses movement from a point in ti me backward to an e arl ie r p oint in

tim e . T he re fo re , a c c or din gto t he pla in
me anin gof

“ c arr y ov e rs ,” the Re lief Ru le do e s n ot a pp ly to c arr y ba c ks of NO L s.
I t b ec o mes eve n more c lear that Congr ess used “ca rryovers” in the R eli ef Rule a s a sy nony m for “ca rry forwa rds” a fter c onsid er i ngthe re lationship between § 56 and § 172. See Sam antar v. Y ousuf , 1 3 0 S. Ct. 2278, 22 89 (2 01 0) (“ [W]e d o n ot

. . . c on str ue statut or

y phra se s in i s o l at i o n ; we re ads t atu t es as a w h o l e. ”) (qu o t i n g United S tates v. Morton , 4 6 7 U

. S

. 8 2 2 , 8 2 8 ( 1 9 8 4 ) )

. S e c t i o n 5 6 isM ETR O O NE V

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10 closely related to § 172, beca

use § 56 “def

ine[s] ATNOL

by
e xpre ssl y inc or po ratin gthe de fi nit ion

of reg ular NO Lin § 172 and then e n u m erating spe cific e x ceptions . . . .” Kadill ak v. Comm ’r , 534 F.3d 1197, 1203 (9th Cir. 2 0 0 8). Acc ording ly , § 172 define s NOL as the sum of two pa

rts: (1) the carrybac ks to that year of NOL s and (2) the c arry ov e rs to that y ear of NOL s. § 172(a) . Paralleling§ 17 2 , the Relief Rule addre sses eac h component of the NOL D: The amount of the NOL D “attributable to the s u m o f carry backs of net operating losses fr om tax able y ear s endingduring2001 or 2002” is not subject to the 90% limit ty pically imposed on NOL carry b acks. § 56( d)(1) (A)( ii)(I ) (e mphasis added)

. L ike wi se , th e amou

nt o f t he NO L D attr ibuta

ble to “ca rry ov e rs o f n e t o p e r ati n glo s s e s to taxa b le y e ar s e n d ing during2001 and 2002” is also not subject to that lim it. Id. (e mph a sis a dd e d) . B e c a

us e Con g re ss u se d “ c arr

y ov e rs ” in the Relief Rule to re fer

to the part o f t h e NOL D computed under § 172 with the same label, it intended the w ords to have th e s am e m ea n i n g. Additionally , we note that Congr ess could have easily and clea rly extended the bene fit of t h e R elief Rule to taxpay ers like Metro who c arr ied bac k NOL s from tax y ear s afte r 2002, wi th o u tu s i n g “c arry o v er s ” c o n tra ry t o i t s p l ai nm ea n i n g. Insertingthe words “ to or” into the phrase “ca rry backs of net operating losses fr om tax able year s endingdu ring2001 or 20 02 ” wo uld

have thi s e ff

e c t. T he re su lti ngph ra se wo uld read: “ c arr

y ba c ks of ne t op e ratin glos se s to or from taxab le y e ars e nd ingduri ng20 01 or 20 02 .” However, Co ng re ss elec ted not to i n s er t those words into the text of the statute. I f Cong ress did intend to e x tend the Relief Rule to NO L s that
a taxpay e r c arr ie d b a c k f

rom tax y e ars late r t

ha n 2 00 2, it
wo uld be od d to do it b y

us ingthe wo rd

“ c arr y ov e rs ”M ETR O O NE V

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A s exam p l es of

t hese s t at ut es, M et ro ci t es I

. R

. C

. §§ 13 6 2 (e)(6 )( A ), 6 1 3 7 1 (b), 53 5 (b)(7).

I n f act , C ongr es s al s o u s es t he t er m “ car r y over s ” i n s ect i ons ot her t han 7 5 6 a n d 1 7 2 a c c o rd ing to its p la in m e a n ing

. E .g ., §§ 45 A (d)(2), 50 (a)( 3 ), 5 0 (c)( 2 ). contra ry to its plain mea

ning, when simply

addingtwo words
w o u l d h av e p r o d

u c e d th e s am e e f

f e c tw i thm o r e c l ar i ty. We understand that Cong ress ha s u s ed the term

“ c a rr y o v e r s ” i no th e r

p art s o f th e t a x c o d e t o r e f

e r t o bo th “ca rry forwa rds” a nd “ca rry backs.” Howeve r, t hat fact does

6 not sugg est that “c arr

y overs” must have a non- ordinary meaningin the Relief Rule. S u ch uses only indicate that Congr ess sometimes uses “c arr y o v ers” in an out-of- theo r d i n ar y w ay. Th e va

ri e d u se s o f t

he te rm “ c arr y ov e rs ” in 7 the Code also explain why we c annot, her e, assume “ that ident i ca l words used in diff ere nt parts of the same ac t are inte n d e d to h av e th e s ame me an ing .” S orenson v. Se c’y

of Treasury of United States , 475 U.S. 851, 860 (1986) (inter nal qu otatio n ma

rk s o mitte d)

. Cle arl y , Con g re ss int e nd e d to us e

“ c arr y ov e rs ” in s ome pr ov isi ons of th e Cod e to m e an b oth

“ c arr y fo rw ard s” and

“ c arr y ba c ks ,” and

in oth e r p ro vis ion s, to me an o nly

“ c arr y fo rw ard s. ” Th e re fo re, we c ann ot a do pt a un if or m de fi nit ion

of the te rm “ c arr y ov e rs ” a pp lic a ble to ever y usag e of the term in the Code. Rather, we only confirm that, in the Relief Rule, “c arr y overs” means “ car

ry forwa rds.”
Metro ar g ues that we should rejec t the plain meaningof “ca rryovers” and instead follow the canon that “w here Congr ess includes pa

rticular la ng uag e in one s ection of a st atu te but om its it i n a

no the r s e c tio n o f t

he same Ac t, i t is g ener ally presumed that Con gre ss acts intentionally andM ETR O O NE V

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12 purposely in the disparate inclusion o r exclusion.” United Sta te s v. W ah id , 614 F.3d 1009, 1014 ( 9th Cir. 2010). Howeve r, where the plain meaning rule has provided a c lear
answe r, we do not need to loo k t o other c anons of statutory construction. Se e Un ite d St ate s v . H arre ll , 637 F.3d 1008, 1 0 1 0 (9 thC i r. 2 0 1 1 ) ( qu o t i n g Hughes Aircraft Co. v. Jacobse n , 525 U.S. 432, 43 8 (1999)) . Neve rtheless, Metr o also argues that our e x clusive re liance on t h e plain meaning of the statute’ s tex t, rather than other c anons of c onstruction, “may unnece ssarily

establish prec edent r eg ardingthe re lative
we ig ht g ive n to c omp e tin gc anons.” Th is c on c e rn is m oo t. I t i s al re ady

well-settled that, in the r ealm of the canons of st atu to ry con st ruct io n, th e pl ain mea ni ng rul e is “pre eminent.” See McDonald v. Sun Oil Co. , 548 F.3d 774, 780 (9th Cir. 2008). Ther efor e, re gar d l ess of what other canons of statutory construction mig ht sugg est, under the pla in m e anin gof

the te xt, “ c arr

y ov e rs ” in th e Re lie f R

ule means “ car

ry forwa rds.” Relying on Benton v. Co mm i ssioner , 122 T.C. 353, 370 (2 00 4) , M e tr o a lso argue s th at w e sh ou ld a ba nd on the pla in meaningof “c arr

y overs,” and instead de fine the term
acc ordingto its purp o s e. Howeve r, the Benton court’s imp lic it c on str

uc tio n o f t

he ter m “c arr

y ov e rs ” in § 13 98 to include car

ry backs does not c hang e our conc lusion. S ection 1398 imposes conditions on the use of NOL s in an d af ter a chapte r 7 or c hapter 11 bankruptcy case . I .R.C. § 1398(a); Benton , 122 T.C. at 370. Under § 1398(g )(1) , the bankr uptcy estate suc cee ds to the debtor’s “ net oper atingloss carr y overs deter mined under section 172” upon the commencement of a bankruptc y

case . After

the ca se terminate s, th e d ebtor then
s u c c e e d s t o th e t a x a s p e c t s o f th e e s t at e ( i n c l u d i n gN O Ls specifie d in § 13 9 8 (g )(1) ), “but takinginto account that theM ETR O O NE V

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See s upr a n o te s 6

– 7 a n d a c c o m p a n ying tex t. 8 transf e r is f r o m th e e s tate to th e d e b to r in s te a d o f f r o m the debtor to the e state.” § 1398( i).
Ba sed on these provisions, the Tax C ourt in Benton conclude d that “the losses succe eded to [by the debtor] from the estate may

be used, to the e x tent permitted in section 172

. . . .” Benton , 122 T.C. at 376. B eca use § 172 provides f

or NOL s to be carrie d back, the court’s c onclusion impli es that the debtorcould ca

rry back N OL s that he inherited unde r § 1398(i). Ne cessa

rily , this means that the Tax Court rea d the ter m “ca rryovers” in § 1398(g )(1) —which def ines the tax attribu t es that the debtor suc cee ds to—as including N OL c arr y ba c ks

. Th e Tax Cour

t’ s imp lic it int e rp re tatio n of § 13 98 (g )( 1) in Benton do e s n ot u

nd e rm ine ou r c on c lus ion that Co ng re ss used “c arr

y overs” acc ordingto its ordina ry m eaningin the Re lie f R ule . A ssumin gthat th e Tax Cour t’ s ana ly sis is
corr ect, we can a cce pt that § 1398 is another instance in the Co de wh e re Con g re ss u se d “ c arr y ov e rs ” to r e fe r t o b oth
c arr y fo rw ard s and

c arr y ba c ks

. At the same time, we

8
rec og nize that the pl ain m eaningof “c arr y overs” could not be
a pp lie d to § 1 39 8( g )( 1) fo r r e a so ns tha t do no t pr e ve nt i ts a pp lic atio n in

the Re lie f R

ule . I f “car

ryov e rs ” in § 1 3 9 8 ( g ) ( 1 ) me a nt only “ca rry forwa rds,” then § 1398(j)(2) (B ), which pr ohibits a debtor from offse tting pre

petition income by

car rying ba ck NOL s it inherits from the bankruptc y

estate, w ould serve no pur p o s e. S ection 1398(g )(1) wo uld alrea dy eff ectively bar anyNOL s from being car ried back, because the debtor would not i nherit them from the bankruptcy

estate. Thus, the plain meaningof the te r m “ c ar r y o v e r s ” c o u ld

n o t a p p ly in § 1 3 9 8 ( g ) ( 1 ) withoutM ETR O O NE V

. C IR

14

T he p art i es make a d i st i nct i o n be t ween “f unct i o nal ” and “ no n- 9 funct i o nal ” uses o f t he t erm “car ry o ver” i n t he C o d e. “Ca rr yo v e rs ” in § 1398( g ) ( 1) w ou l d be a f u n ct i onal us e of

t h e t er m, a cc or di n g t o M et r o, b ecause i t s m eani ng canno t b e d et erm i ned b y l o o ki ng t o t he sur round i ng te x t. T h u s, M e tro a rg u e s tha t, “ Bent on shows t hat i t i s ap p rop ri at e f o r a cou r t t o de t er mi n e t h e mea n i n g of t h e wor d” t h at i s us ed “ f u n ct i on al l y ” by
w h a t t h e “o p e ra tive tex t” o f t h e se c tio n it a p p e a rs in is “inte n d e d to
ac compl i s h

. ” H owe v er , u n l i k e i n t h i s c as e, t h e T ax Cour t i n B ent on d eri ved t he “ p urpo se” of § 1 3 9 8 by anal y zi ng general p ri nci p l es of t ax and b an kru p t cy l aw , an d t he o p era t i o n o f § 1 3 9 8 i n li gh t o f

t ho se p rincip l es. 1 2 2 T

. C

. at 37 3

– 7 4

. H ere, M et ro asks us to d eri ve a “ p urpo se” f rom t he R e lief R u le ’s thin leg islativ e histo ry. A s d e sc rib e d b e lo w , i nf r a Pa r t I I I

. C,
w e a re n o t p e rs u a d e d tha t t h e leg islativ e histo ry su p p o rts M e tro ’s i nt erpret at i o n, cert ai nl y not eno ugh t o ove rcom e t he p l ai n m eani ng of t he l ang uag e u s ed i n t he s t at ut e. rende ri n g§ 1398(j)(2) (B ) “me aning less or super fluous.” United States v. Cabacc ang , 332 F.3d 622, 627 ( 9th Cir. 2003). The Re lief Rule does not present the same struc tural p r o b le m. T h e r e f

o r e , at m o s t, B en ton confirms that the te rm “ca rryovers” is not alway s u s ed accor ding to its ordinar y m ea n i n g. Th e c a se do e s n ot s ug g e st, ho we ve r, that Co ng re ss

9 used “c arr y overs” in the Relief Rule t o mean somethingother th an i t s p l ai nm ea n i n g.
C. Le gis lat ive hist or y c onfir m s t hatCo ngr e ss int e nde d “c ar r yo ve r s” in § 56 to hav e its pl ain
m eaning.
Th e pla in m e anin g a lso do e s n ot “ pr od uc e a re su lt de mon str a

bly at od ds wi th the int e nti on s o f [the Rul e ’s ] draf ters.” Uni ted States v. Ron Pair Enters., Inc

. , 4 89 U. S. 23 5, 24 2 ( 19 89 ); see also Albertso n ’s , Inc. v . Comm’r , 42 F.3d 537, 545 ( 9th Cir. 1994). Al t h o ug h leg islative history can be rea d as an e x pression of the inte n t i o n o f t he leg islature, it is certa inly

not the best expression. See LyonsM ETR O O NE V

. C IR 15

T h i s f a c t di s t i n g u i s h e s t h i s c a s e f r om A l b ert

son ’s . H a d the c o u rt in 10 t hat cas e f

ol l owed t he pl ai n meani ng , i t woul d h ave cr eat ed a lo o phol e, permi t t i ng bus i nes s es t o avoi d a di s i nce nt i ve t hat C ongr es s i mp l ement ed t o “ enco urage em p l o y ers t o creat e q ual i f i ed [def err ed compe n s at i o n] pl ans f or t hei r empl oy ees
. ” A l b ert son ’s , 42 F. 3d at 5 43 –4 4. U nl i ke t hat ca s e, adop t i ng t he pl ai n m ea ni ng of “ car r y over s ” h er e wi l l not comp r om i s e a s t at ut ory mecha ni s m t hat Co ng r es s i mp l ement ed t o f ur t her i t s pur po s e. v. Me ndez , 303 F.3d 285, 293 ( 3d Cir. 2002) (“ [T] he text of the statute is the best expression of the intent of Cong ress.” ). Ra th e r , it is “ o f te nmu r ky , amb igu o u s , an d

c o n tr a d ic to ry .” Gonzalez v. Arizona , 677 F.3d 383, 450 n.1 ( 9th Cir. 2012) (R awl ins on , J., c on c ur

ri ng in pa

rt and dis se nti ng in p art ) (qu o t i n g E

xxon Mobil Corp. v. Allapatt ah Servs., I nc. , 545 U.S. 546, 568 (2005)), cert. granted sub nom

. Arizona v. Inter Tribal Council of Arizona, Inc. , 133 S. Ct . 476 (2012).
Her e, Cong ress ha s g iven us very littl e leg islative history to go on: 10
the September 11, 2001 attacks have ca used
a dv e r s e e f

f e c t s t o th e U

. S

. e c o n o m y. Th ou sand s of Ame ri c ans have los t jo bs

. Consumer confide n c e a

n d in v e s tor confide nce are low . T he Committe e be lie ve s th at it is
nece ssary to spur economic growth and job
cre ation and help s t rugg ling businesse s and unemploy ed wor

kers. The pro v isions approve d by the Commi ttee will sti mulate and
s tr e n g th e nth e e c o n o m y. H.R. Rep. No. 107-251, at 18 (2001). Parsin g the g ener al languag e in this passag e, Cong ress a ppare ntl y enacted the Relief Rule (among othe r l eg islation) to “stimul ate a nd str e ng the n th e e c on omy” in r e sp on se to t he e c on omi cM ETR O O NE V

. C IR

16

“ C arry f

o rwards” w a s replaced by t he t erm “ carry o vers ” when t he 11 R el i ef R ul e was am end ed by T ax R el i ef A ct of 2 0 0 4 § 4 0 3 (b). downturn that followed the terrorist attacks of September 11, 2001. Specifica lly , Congr ess soug ht t o streng then the economy by “spur[ ri ng ] economic g rowth and job c reation and help[ing] s trug g ling businesse s and unemploy ed worke rs.” Te mporally , Congr ess was appar ently targ etingan im medi ate pr ob le m, b e c a us e it e mpl oye d th e pa st t e ns e to de scrib e the so ur c e of

e c on omi c do wntur

n: “ Th e te rr or ist attacks . . . have affec ted the Un ite d Stat e s in nume ro us wa

y s. In addition to the [l ives lost] , the September 11, 2001 attacks have c aused

adver se ef

fec ts to the U.S. economy .” H.R. Rep. No . 1 07 -2 51 , at 18 (e mph a sis a dd e d) . T hu s, Con g re ss enac ted t h e R elief Rule to addr ess an e conomic slowdown that exis ted at the time of its ena ctment.
Con sis te nt w iththi s und e rstan din gof Con g re ss’ s inte nt, the or ig ina l Re lie f R

ule wo uld have ha d its p ri mary e c on omi c eff ect in 2002 and 2003 by

providingbusi n es s es wit h extra cash a s a re sult of refunds a nd deductions g en er at ed during the 20 01 and

20 02 tax y e ars . O ri g ina lly , the Re lie f Rul e on ly
a pp lie d to “ c arr

y ba c ks of ne t op e rating loss e s f

or taxab le y ear s endingduring2001 or 2002 and c arry for war ds of net operating losses to taxable y ear s endingduring2001 and 2002.” Jobs Act of 2002 § 102(c) (empha sis added). Obviously , the term c arr y forw ar ds does not include

11
ca rr y backs. Thus, a fter 2002, tax pay ers would have bee n unable to take advanta g e of the Relief Rule by car rying ba ck NOL s g ener ated in those y ear s to of fset 2001 or 2002 income. The ref

ore, the orig inal Relief Rule per mitted an AMT taxpay er to fr ee up cash that would otherwise be subject to taxation i n only two way s. First, if the tax pay er su sta ine d lo sse s in

20 01 or 20 02 su ff

ic ie nt t o g ive ri se toM ETR O O NE V

. C IR 17

C o nt rary t o M et ro’ s argum ent , C o ngres s d i d not i nt end to change t he 12
e c on om i c e f

f e c t of t h e or i g i n a l Re l i e f Ru l e w h e n i t c h a n ged

“ ca r r y f or wa r ds” t o “car r y ov er s ” i n 2004. B ot h t h e Joi n t Commi t t ee on T axa t i on an d t he 20 04 Co nf er enc e Co mm i t t ee des cr i bed t he cha ng e a s merely “cl er i cal

. ” See H

. R

. R ep
. N o
. 10 8

- 6 9 6 , at 90 (Sep t

. 30 , 20 0 4 ); Joi nt Co mm i t t ee on T axa t i on, D es cr i pt i on of t he “T ax T ech ni cal C o rr ect i o ns A ct of 2 0 0 3 , ” JC X

- 1 0 4

- 0 3 , at 4 (D ec. 3, 2 0 0 3 ). Such a
c h a n g e w a s n e c e ssa ry, b e c a u se the R u le us e d “c a rr yo v e rs ” to m e a n b o th

“ ca r r y f or wa r ds ” an d “ ca r r y bac k s , ” but § 172, w h i ch t h e Rul e di s cu s s ed,
use d “ car r y over s ” t o m ean onl y “ car r y f orwa r ds. ” T hu s , t he cl er i cal
c h a n g e of

w or di n g s e n s i bl y el i mi n a t e d a n i n c on s i s t e n t u s a g e of t h e s a me word i n c l ose l y r el at ed s ect i ons of t he C od e. NOL s, it could carry back those NOL s to prior tax y ear s. The Relief R u l e would permit such a business to offset a n a dd iti on a l 10 % o f t

he inc ome in t

ho se pr ior tax y e ars wi th i ts 2001–02 NOL s that it co u l d n o t have of fset under the pre

Re lie f Rule ve rs ion of § 5 6( d) (1 )( A) . T his wo uld g ive ri se to a re fund, providingthe business with additional cash in 2002 or 200 3

—th e y e ar s in

w h ic hr e f

un d s f r o m 2 0 0 1 an d

2 0 02 would have be en re ceive d.
Second , a b u s in e s s c o u ld

a ls o f r e e u p c a s hb y c ar r y ing forwa rd unused NO L s from pre vious tax y ear s t o 2 0 0 1 or 20 02 , p ote nti a lly

of fs e tti nga ll o f its ta xab le inc ome in t ho se y ear s. Obviously , the direc t economic e ffe ct of this part of the Rule would not pe rsist pa st 2003, be cause 2002 would be the la st t a x y e ar that the Rul e wo uld have pe rm itt e d anAM T taxpay e r t o c omp le te ly

of fs e t it s taxab le inc ome wi th N OL s. There fore , judgingby

the ec onomic eff

ects o f the orig inal Relief Rule, Cong ress e nacte d the Rul e t o stimul ate the
ec onomy by providing businesses with additional cash, primarily in 2002 and 2003. B e c a use a pp lyingthe pla in 12 meaningof “c arr

y overs” to the Relief Ru l e wo uld have theM ETR O O NE V

. C IR

18

In d e e d , C o n g re ss e lim ina te d the R e lief R u le in 2 0 0 9

. See W o rk er, 13 H omeow n er s h i p, a n d B u s i n es s A ss i s t an ce Act of 2009, Pub. L. 111- 92, § 13 (b), 12 3 Stat

. 29 8 4 , 29 9 3

– 9 4 (20 0 9 ). same e c on omi c e ff

e c t, it is no t de mon str a

bly at od ds wi th C o n gre s s ’s i n t en tfo r u s t o ad h er e t o th atm ea n i n g.
M e tr o ar g u e s th at th e p la in me an in g is d e mo n s tr a b ly at od ds wi th C on g re ss’ s inte nt, be c a us e the Re lie f Rul e “ wo uld not provide any benef

it to taxpay ers that g ener ated po sitive AM TI thr ou g h 2 00 2 b ut s tr

ug g le d ( and

g e ne ra te d A TN OL s) there afte r” if “ car

ryovers” means only

“carryforwa

rds.” Me tr o a rgue s t his r e su lt o pp os e s Co ng re ss’ s inte nt t o “ he lp strug g ling businesse s,” particula rly those that strug g led af ter September 11, 2001. By focusing on this short ph ra s e from the R u le’s limited leg islative history , Metro has “ look[ ed]
over a crow d and pick[ed] out [a] friend[].” Exxo n M ob il , 54 5 U .S. at 56 8. Ho we ve r, the re is no e vid e nc e tha t Co ng re ss intended to suspend the 90% limit i n p erpe tuity following September 11. Moreove r, t aking the leg islative history and 13 the orig inal Relief Rule tog ether, we are c onfident that Con g re ss w a s f

oc us e d o n p ro vid ingthe great e st e c on omi c stimul us during 2002 and 2003; de termining what e ffect Con g re ss i nte nd e d th e Rul e to h ave be y on d th at w ou ld require speculation that we will not indulge.
C i t i n g Albertson’s, Inc v . Comm’r , 42 F .3 d 5 37 , 5 45 (9 th Cir. 1994), Metro a lso argues that we should not adopt the plain meaningof “c arr

y overs,” beca

use doingso will produce absurd re s ults. The absurd r esult Metro for esee s is that the pla in m e anin g “ c a

pr ic iou sly a llo ws the Re lie f Rule to b e ne fi t ATNOL s car

ried ba ck to 2001 and 2002 de pendingon whether and to what e x tent other ATN OL s are car ried for war d to the Carryover Y ear

in question.” We disag ree
.M ETR O O NE V

. C IR 19

As t he C om mi s s i oner poi nt s out , a t axpay er w ho se 2 0 0 1 t ax y ear 14 ended pri or t o Sept emb er 1 1, 2 00 1 coul d hav e accr ued N O Ls i n 2001 t hat
cou l d be c ar r i ed bac k u n der t h e Rel i ef Rul e, e v en t h ou g h i t w ou l d be i mp oss i bl e f

or t he l oss es t hat ga ve r i s e t o t he N O Ls t o hav e been ca us ed by t he Sept emb er 11 terro r i s t at t ack s
. T hu s , r ega r dl es s of wh et her “car ry o vers ” m ean s “car ry f o rwards” o r bo t h “ carry f o rwards” and “car ry b acks, ” t he ext ent t o whi ch a gi ven t axp ayer co ul d be nef i t f rom t he R ul e c oul d var y wi t h t he amo un t of pre - 9/ 11 N O Ls t hat t he t axpay er ha d accrued

. T he f

act t hat f

o l l o wi ng t he p l a i n m eani ng of t he t erm “car ry o vers ” wi l l have t he same ec o no m i c af f ect o n l y co nf

i rms our re lian c e o n it

. B a se d o n th e little le g isl ativ e his tor y ava ila ble , it is unclea r that Cong ress wa s conce rned a bout th e ab i lity

of taxpay ers in y ear s after

2002 t o take f

ull advantag e of the Re lie f R ule

. Th e pr ima

ry e c on omi c e ff

e c t of the Re lie f R

ule would have oc curr ed in 2002 an d2003, based on the ded uction s a

nd re fu nd s it wo uld g e ne rate . T hat e c on omi c eff ect de pended, in lar g e par t, on a taxpay er ha

ving
acc umulated NOL s in pr ior y ear s that it could car ry forwa rd to 2001 or 2002 to offset income in those y ear s, o r having
excess income in prior y ear s that could be of fset by car rying back N OL s from 2001 or 2002. There fore , to the extent that the Re lie f Rul e ha s any e c on omi c e ff e c t a ft e r 2 00 3, it w ou ld
no t be ano ma lou s o r “absurd ” fo r t he e c on omi c be ne fi t to de pe nd on the tax pay e r h avin ga c c umu late d N OL s p ri or to 2001 that could be c arr ied forw ard. Eve n i n 2 0 0 1 or 2002, muc h o f t he be ne fi t of

the Rul e wo uld

on ly be ava ila

ble to taxpay ers that had ac cumulated NO L s befor e 2001 or 2002. 14
Th e re fo re , th e pla in m e anin gof the te rm “ c arr y ov e rs ” is consistent with its purpose as expressed in the limit ed le g isl ativ e his tor

y and wh at we c an inf

e r f ro m th e e c on omi c e ff e c t of the or ig ina l ve rs ion

of the Ru le. B e c a

us e the pla in
me anin gof

the te rm “ c arr y ov e rs ” does not pr od

uc e a re su ltM ETR O O NE V

. C IR

20
that is unre a so na

ble and pla inl y at odds wi th t he po lic y of thi s l egi s l at i o n , th e t erm“c arry o v er s ” i n§ 5 6 (d )( 1 )( A) (i i )( I) means NO L s that are car ried for war d from a tax y ea r t o a subsequent tax y ear
. IV. Conclusion
The Tax Court interpreted t h e ter m “ca rryovers” in the Re lie f R ule ( § 5 6( d) (1 )( A) (i i) (I )) c or re c tly , b e c a

us e it int e rp re te d th e te rm a c c or din g to its pla in m e anin g . T he pla in meaningis confirmed by the context of the Reli ef Rule and the sparse leg islative history available for the statute.
AF F IRM ED

.