§1314 — Amount and method of adjustment
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Statute Text — 26 U.S.C. §1314
In computing the amount of an adjustment under this part there shall first be ascertained the tax previously determined for the taxable year with respect to which the error was made. The amount of the tax previously determined shall be the excess of—
the sum of—
the amount shown as the tax by the taxpayer on his return (determined as provided in section 6211(b)(1), (3), and (4), relating to the definition of deficiency), if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus
the amounts previously assessed (or collected without assessment) as a deficiency, over—
the amount of rebates, as defined in section 6211(b)(2), made.
There shall then be ascertained the increase or decrease in tax previously determined which results solely from the correct treatment of the item which was the subject of the error (with due regard given to the effect of the item in the computation of gross income, taxable income, and other matters under this subtitle). A similar computation shall be made for any other taxable year affected, or treated as affected, by a net operating loss deduction (as defined in section 172) or by a capital loss carryback or carryover (as defined in section 1212), determined with reference to the taxable year with respect to which the error was made. The amount so ascertained (together with any amounts wrongfully collected as additions to the tax or interest, as a result of such error) for each taxable year shall be the amount of the adjustment for that taxable year.
The adjustment authorized in section 1311(a) shall be made by assessing and collecting, or refunding or crediting, the amount thereof in the same manner as if it were a deficiency determined by the Secretary with respect to the taxpayer as to whom the error was made or an overpayment claimed by such taxpayer, as the case may be, for the taxable year or years with respect to which an amount is ascertained under subsection (a), and as if on the date of the determination one year remained before the expiration of the periods of limitation upon assessment or filing claim for refund for such taxable year or years. If, as a result of a determination described in section 1313(a)(4), an adjustment has been made by the assessment and collection of a deficiency or the refund or credit of an overpayment, and subsequently such determination is altered or revoked, the amount of the adjustment ascertained under subsection (a) of this section shall be redetermined on the basis of such alteration or revocation and any overpayment or deficiency resulting from such redetermination shall be refunded or credited, or assessed and collected, as the case may be, as an adjustment under this part. In the case of an adjustment resulting from an increase or decrease in a net operating loss or net capital loss which is carried back to the year of adjustment, interest shall not be collected or paid for any period prior to the close of the taxable year in which the net operating loss or net capital loss arises.
The amount to be assessed and collected in the same manner as a deficiency, or to be refunded or credited in the same manner as an overpayment, under this part, shall not be diminished by any credit or set-off based upon any item other than the one which was the subject of the adjustment. The amount of the adjustment under this part, if paid, shall not be recovered by a claim or suit for refund or suit for erroneous refund based upon any item other than the one which was the subject of the adjustment.
This part shall not apply to any tax imposed by subtitle C (sec. 3101 and following relating to employment taxes).
33 Citing Cases
enerally applicable period of limitations or by some other rule of law, see sec. 1311(b); and (4) the party who seeks to employ - 7 - the mitigation provisions must act timely thereunder and in the proper manner to make a corrective adjustment, see sec. 1314. Fong v. Commissioner, T.C. Memo. 1998-181. We discuss these conditions below as they apply to this case. Section 1313(a) provides that a "determination" is one of the following: An action by this Court or another court of competent jurisdic
Adjustment.-- (1) Maintenance ofan inconsistent position.-- * * * [A]n adjustment shall be made under this part only if-- * * * * * * * (B) in case the amount ofthe adjustment would be assessed and collected in the same manner as a deficiency under section 1314, there is adopted in the determination a position maintained by the taxpayerwith respect to whom the determination is made, and the position * * * maintained by the taxpayer in the case described in subparagraph (B) is inconsistent with
Adjustment.-- (1) Maintenance ofan inconsistent position.-- * * * [A]n adjustment shall be made under this part only if-- * * * * * * * (B) in case the amount ofthe adjustment would be assessed and collected in the same manner as a deficiency under section 1314, there is adopted in the determination a position maintained by the taxpayerwith respect to whom the determination is made, and the position * * * maintained by the taxpayer in the case described in subparagraph (B) is inconsistent with
Definition ofUnderpayment.--Forpurposes of this section, the term "underpayment" means-- (1) Income, estate, gift, and certain excise taxes.--In the case ofa tax to which section 6211 (relating to income, estate, gift, and certain excise taxes) is applicable, a deficiency as defined in that section * * * Thus, at one time, the terms "underpayment" and "deficiency" were coextensive.
The third passage is section 1314 (amongst the mitigation provisions of sections 1311 through 1314), and in that instance, this phrase appears only in connection with a cross-reference to section 6211.
2 is prevented by the operation of any law or rule of law, other than this part and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314. Under section 1313 (a), a determination is (1) :a decision by the Tax Court or a judgment, decree, or other order by any court of ompetent jurisdiction, which has become final; (2) a~closing ágreement made uncer section 7121; (3) a fina
ed by the generally applicable period of limitation or by some other rule of law, sec. 1311(b); and (4) the party who seeks to invoke the mitigation provisions acted timely thereunder and in the proper manner to make a corrective - 24 - adjustment, sec. 1314. Secs. 1311-1314; Fong v. Commissioner, T.C. Memo. 1998-181. The party seeking to invoke the mitigation provisions bears the burden of showing that all requirements are met. Fruit of the Loom, Inc. v. Commissioner, 72 F.3d 1338, 1341 (7th Ci
136, section 1314, 42 Stat. 227. The legislative history states that the purpose of the 1921 provision was to–- permit the Treasury Department to apply without retroactive effect a new regulation or Treasury decision reversing a prior regulation of Treasury decision * * *. This would facilitate the administration of the internal revenue laws in that it
- 11 - In support of the instant motion for summary judgment and as a matter of law, petitioner argues primarily that the fact situation presented to us in this case does not qualify under any of the specific circumstances of adjustments described in section 1312 and therefore that the second of the above conditions is not satisfied in
revailed in the determination maintained a position that was adopted there and that was inconsistent with the erroneous treatment. Sec. 1311(b). If the mitigation provisions apply, the taxable income for the year of the error may be adjusted under section 1314. Sec. 1311(a). Having invoked the mitigation provisions, respondent bears the burden of proving that each of the four requirements has been met. Fruit of the Loom, Inc. v. Commissioner, 72 F.3d at 1341. Initially, we think it clear that th
this part [i.e., secs. 1311-1314, which constitute part II of subch. Q of ch.1] and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314. (b) Conditions Necessary for Adjustment.-- * * * * * * * (2) Correction not barred at time of erroneous action.-- (A) Determination described in section 1312(3)(B).--In the case of a determination described in section 1312(3)(B) (relati
this part [i.e., secs. 1311-1314, which constitute part II of subch. Q of ch.1] and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314. (b) Conditions Necessary for Adjustment.-- * * * * * * * (2) Correction not barred at time of erroneous action.-- (A) Determination described in section 1312(3)(B).--In the case of a determination described in section 1312(3)(B) (relati
or judicial proceeding relating to another year. Fruit of the Loom, Inc. v. Commissioner, T.C. Memo. 1994-492, affd. 72 F.3d 1338 (7th Cir. 1996). If the mitigation provisions apply, the taxable income for the year of the error may be adjusted under section 1314. Sec. 1311(a). Petitioners allege that the recapture of the tax credit in 1984 was erroneous. However, the tax year 1984 is not before us, and we lack jurisdiction to redetermine whether petitioners overpaid their income tax liability fo