Metro One Telecommunications, Inc. v. Commissioner
2012 U.S. App. LEXIS 25879
9th Cir.2012Background
- AMT taxpayers could use NOLs to offset income under the Relief Rule §56(d)(1)(A)(ii).
- Relief Rule allowed NOL carrybacks to 2001–2002 and carryovers to 2001–2002 without 90% AMTI cap.
- Metro used 2003–2004 NOLs to offset 2002 AMT income entirely, triggering a deficiency.
- IRS issued a Notice of Deficiency of $630,159; Tax Court agreed, Metro appealed.
- Question presented: does “carryovers” in the Relief Rule include carrybacks from later years or only carryforwards?
- Court affirms Tax Court, ruling that “carryovers” means carryforwards only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Relief Rule’s “carryovers” include carrybacks? | Metro argues carryovers include carrybacks. | CIR argues carryovers mean carryforwards only. | Carryovers mean carryforwards only. |
| Plain meaning vs. canons of construction. | Metro relies on multiple canons and Benton to redefine carryovers. | Court emphasizes plain meaning governs here. | Plain meaning controls; carryovers = carryforwards. |
| Legislative history supports the plain meaning. | Metro cites limited history to argue broader relief. | History is inconclusive and not determinative. | Legislative history does not override plain meaning. |
| Does applying the plain meaning cause an absurd result? | Metro contends misalignment with congressional intent post-9/11. | No absurd result; intended economic stimulus focused on 2002–2003. | No absurd result; plain meaning consistent with intent. |
Key Cases Cited
- Williams v. Taylor, 529 U.S. 420 (2000) (plain meaning governs statutory interpretation)
- Kadillak v. Comm’r, 534 F.3d 1197 (9th Cir. 2008) (relationship of § 56 and § 172; NOLs defined similarly)
- Benton v. Commissioner, 122 T.C. 353 (Tax Court 2004) (bankruptcy context; carryovers may include carrybacks in some contexts)
- United States v. Wahid, 614 F.3d 1009 (9th Cir. 2010) (statutory construction canons; use of plain meaning primary)
- United States v. Cabaccang, 332 F.3d 622 (9th Cir. 2003) (avoid meaningless results; interpretation within statute’s structure)