Opinion ID: 814015
Heading Depth: 3
Heading Rank: 2

Heading: The plain meaning of carryovers refers only to

Text: items that are carried from an earlier period to a later one. When interpreting a statute, we must start with the language of the statute. Williams v. Taylor, 529 U.S. 420, 431 (2000). Moreover, “[i]n the absence of an indication to the contrary, words in a statute are assumed to bear their ordinary, contemporary, common meaning.” Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202, 207 (1997) (internal quotation marks omitted). The term “carryovers” ordinarily and commonly refers only to something that is carried from an earlier period to a later one—only to carryforwards. To ascertain the plain meaning of terms, we may consult the definitions of those terms in popular dictionaries. Af-Cap, Inc. v. Chevron METRO ONE V . CIR 9 Overseas (Congo) Ltd., 475 F.3d 1080, 1088 (“When determining the plain meaning of language, we may consult dictionary definitions.”). Black’s Law Dictionary defines a “carryover” as “[a]n income-tax deduction (esp. for a net operating loss) that . . . may be taken in a later period . . . .” Black’s Law Dictionary 242 (9th ed. 2009); Electrolux Holding, Inc. v. United States, 491 F.3d 1327, 1328 n.2 (Fed. Cir. 2007) (defining “carryovers” in § 1212 by reference to Black’s). Likewise, Webster’s Third New International Dictionary contains multiple definitions of “carry over,” all of which suggest movement from one period of time to a later period of time. Webster’s Third New International Dictionary 344 (1993) (e.g., “to hold over . . . for another season”). Courts also commonly employ “carryovers” for this meaning. E.g., Kansas v. Colorado, 543 U.S. 86, 102 (2004); In re Grand Jury Subpoenas Duces Tecum, 78 F.3d 1307, 1312 n.11 (8th Cir. 1996); United States v. Gregory, 871 F.2d 1239, 1243 (4th Cir. 1989) (“Of these, 19 were new hires and the remaining 11 were carryovers from the previous administration.”); Hoots v. Pennsylvania, 672 F.2d 1124, 1129 (3d Cir. 1982). None of these definitions or usages suggest that the ordinary meaning of “carryover” encompasses movement from a point in time backward to an earlier point in time. Therefore, according to the plain meaning of “carryovers,” the Relief Rule does not apply to carrybacks of NOLs. It becomes even more clear that Congress used “carryovers” in the Relief Rule as a synonym for “carryforwards” after considering the relationship between § 56 and § 172. See Samantar v. Yousuf, 130 S. Ct. 2278, 2289 (2010) (“[W]e do not . . . construe statutory phrases in isolation; we read statutes as a whole.”) (quoting United States v. Morton, 467 U.S. 822, 828 (1984)). Section 56 is 10 METRO ONE V . CIR closely related to § 172, because § 56 “define[s] ATNOL by expressly incorporating the definition of regular NOL in § 172 and then enumerating specific exceptions . . . .” Kadillak v. Comm’r, 534 F.3d 1197, 1203 (9th Cir. 2008). Accordingly, § 172 defines NOL as the sum of two parts: (1) the carrybacks to that year of NOLs and (2) the carryovers to that year of NOLs. § 172(a). Paralleling § 172, the Relief Rule addresses each component of the NOLD: The amount of the NOLD “attributable to the sum of carrybacks of net operating losses from taxable years ending during 2001 or 2002” is not subject to the 90% limit typically imposed on NOL carrybacks. § 56(d)(1)(A)(ii)(I) (emphasis added). Likewise, the amount of the NOLD attributable to “carryovers of net operating losses to taxable years ending during 2001 and 2002” is also not subject to that limit. Id. (emphasis added). Because Congress used “carryovers” in the Relief Rule to refer to the part of the NOLD computed under § 172 with the same label, it intended the words to have the same meaning. Additionally, we note that Congress could have easily and clearly extended the benefit of the Relief Rule to taxpayers like Metro who carried back NOLs from tax years after 2002, without using “carryovers” contrary to its plain meaning. Inserting the words “to or” into the phrase “carrybacks of net operating losses from taxable years ending during 2001 or 2002” would have this effect. The resulting phrase would read: “carrybacks of net operating losses to or from taxable years ending during 2001 or 2002.” However, Congress elected not to insert those words into the text of the statute. If Congress did intend to extend the Relief Rule to NOLs that a taxpayer carried back from tax years later than 2002, it would be odd to do it by using the word “carryovers” METRO ONE V . CIR 11 contrary to its plain meaning, when simply adding two words would have produced the same effect with more clarity. We understand that Congress has used the term “carryovers” in other parts of the tax code to refer to both “carryforwards” and “carrybacks.”6 However, that fact does not suggest that “carryovers” must have a non-ordinary meaning in the Relief Rule. Such uses only indicate that Congress sometimes uses “carryovers” in an out-of-theordinary way.7 The varied uses of the term “carryovers” in the Code also explain why we cannot, here, assume “that identical words used in different parts of the same act are intended to have the same meaning.” Sorenson v. Sec’y of Treasury of United States, 475 U.S. 851, 860 (1986) (internal quotation marks omitted). Clearly, Congress intended to use “carryovers” in some provisions of the Code to mean both “carryforwards” and “carrybacks,” and in other provisions, to mean only “carryforwards.” Therefore, we cannot adopt a uniform definition of the term “carryovers” applicable to every usage of the term in the Code. Rather, we only confirm that, in the Relief Rule, “carryovers” means “carryforwards.” Metro argues that we should reject the plain meaning of “carryovers” and instead follow the canon that “where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and 6 As examples of these statutes, Metro cites I.R.C. §§ 1362(e)(6)(A), 1371(b), 535(b)(7). 7 In fact, Congress also uses the term “carryovers” in sections other than 56 and 172 according to its plain meaning. E.g., §§ 45A(d)(2), 50(a)(3), 50(c)(2). 12 METRO ONE V . CIR purposely in the disparate inclusion or exclusion.” United States v. Wahid, 614 F.3d 1009, 1014 (9th Cir. 2010). However, where the plain meaning rule has provided a clear answer, we do not need to look to other canons of statutory construction. See United States v. Harrell, 637 F.3d 1008, 1010 (9th Cir. 2011) (quoting Hughes Aircraft Co. v. Jacobsen, 525 U.S. 432, 438 (1999)). Nevertheless, Metro also argues that our exclusive reliance on the plain meaning of the statute’s text, rather than other canons of construction, “may unnecessarily establish precedent regarding the relative weight given to competing canons.” This concern is moot. It is already well-settled that, in the realm of the canons of statutory construction, the plain meaning rule is “preeminent.” See McDonald v. Sun Oil Co., 548 F.3d 774, 780 (9th Cir. 2008). Therefore, regardless of what other canons of statutory construction might suggest, under the plain meaning of the text, “carryovers” in the Relief Rule means “carryforwards.” Relying on Benton v. Commissioner, 122 T.C. 353, 370 (2004), Metro also argues that we should abandon the plain meaning of “carryovers,” and instead define the term according to its purpose. However, the Benton court’s implicit construction of the term “carryovers” in § 1398 to include carrybacks does not change our conclusion. Section 1398 imposes conditions on the use of NOLs in and after a chapter 7 or chapter 11 bankruptcy case. I.R.C. § 1398(a); Benton, 122 T.C. at 370. Under § 1398(g)(1), the bankruptcy estate succeeds to the debtor’s “net operating loss carryovers determined under section 172” upon the commencement of a bankruptcy case. After the case terminates, the debtor then succeeds to the tax aspects of the estate (including NOLs specified in § 1398(g)(1)), “but taking into account that the METRO ONE V . CIR 13 transfer is from the estate to the debtor instead of from the debtor to the estate.” § 1398(i). Based on these provisions, the Tax Court in Benton concluded that “the losses succeeded to [by the debtor] from the estate may be used, to the extent permitted in section 172 . . . .” Benton, 122 T.C. at 376. Because § 172 provides for NOLs to be carried back, the court’s conclusion implies that the debtor could carry back NOLs that he inherited under § 1398(i). Necessarily, this means that the Tax Court read the term “carryovers” in § 1398(g)(1)—which defines the tax attributes that the debtor succeeds to—as including NOL carrybacks. The Tax Court’s implicit interpretation of § 1398(g)(1) in Benton does not undermine our conclusion that Congress used “carryovers” according to its ordinary meaning in the Relief Rule. Assuming that the Tax Court’s analysis is correct, we can accept that § 1398 is another instance in the Code where Congress used “carryovers” to refer to both carryforwards and carrybacks.8 At the same time, we recognize that the plain meaning of “carryovers” could not be applied to § 1398(g)(1) for reasons that do not prevent its application in the Relief Rule. If “carryovers” in § 1398(g)(1) meant only “carryforwards,” then § 1398(j)(2)(B), which prohibits a debtor from offsetting prepetition income by carrying back NOLs it inherits from the bankruptcy estate, would serve no purpose. Section 1398(g)(1) would already effectively bar any NOLs from being carried back, because the debtor would not inherit them from the bankruptcy estate. Thus, the plain meaning of the term “carryovers” could not apply in § 1398(g)(1) without 8 See supra notes 6–7 and accompanying text. 14 METRO ONE V . CIR rendering § 1398(j)(2)(B) “meaningless or superfluous.” United States v. Cabaccang, 332 F.3d 622, 627 (9th Cir. 2003). The Relief Rule does not present the same structural problem. Therefore, at most, Benton confirms that the term “carryovers” is not always used according to its ordinary meaning.9 The case does not suggest, however, that Congress used “carryovers” in the Relief Rule to mean something other than its plain meaning.