Collapse to view only § 1311. Correction of error
- § 1311. Correction of error
- § 1312. Circumstances of adjustment
- § 1313. Definitions
- § 1314. Amount and method of adjustment
- [§ 1315. Repealed.
§ 1311. Correction of error
(a) General rule
(b) Conditions necessary for adjustment
(1) Maintenance of an inconsistent position
Except in cases described in paragraphs (3) (B) and (4) of section 1312, an adjustment shall be made under this part only if—
(A) in case the amount of the adjustment would be credited or refunded in the same manner as an overpayment under section 1314, there is adopted in the determination a position maintained by the Secretary, or
(B) in case the amount of the 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 taxpayer with respect to whom the determination is made,
and the position maintained by the Secretary in the case described in subparagraph (A) or maintained by the taxpayer in the case described in subparagraph (B) is inconsistent with the erroneous inclusion, exclusion, omission, allowance, disallowance, recognition, or nonrecognition, as the case may be.
(2) Correction not barred at time of erroneous action
(A) Determination described in section 1312(3)(B)
(B) Determination described in section 1312(4)
(3) Existence of relationship
(Aug. 16, 1954, ch. 736, 68A Stat. 337; Pub. L. 94–455, title XIX, §§ 1901(a)(142), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1788, 1834.)
§ 1312. Circumstances of adjustment
The circumstances under which the adjustment provided in section 1311 is authorized are as follows:
(1) Double inclusion of an item of gross income
(2) Double allowance of a deduction or credit
(3) Double exclusion of an item of gross income
(A) Items included in income
(B) Items not included in income
(4) Double disallowance of a deduction or credit
(5) Correlative deductions and inclusions for trusts or estates and legatees, beneficiaries, or heirs
(6) Correlative deductions and credits for certain related corporations
(7) Basis of property after erroneous treatment of a prior transaction
(A) General rule
(B) Taxpayers with respect to whom the erroneous treatment occurred
The taxpayer with respect to whom the erroneous treatment occurred must be—
(i) the taxpayer with respect to whom the determination is made,
(ii) a taxpayer who acquired title to the property in the transaction and from whom, mediately or immediately, the taxpayer with respect to whom the determination is made derived title, or
(iii) a taxpayer who had title to the property at the time of the transaction and from whom, mediately or immediately, the taxpayer with respect to whom the determination is made derived title, if the basis of the property in the hands of the taxpayer with respect to whom the determination is made is determined under section 1015(a) (relating to the basis of property acquired by gift).
(C) Prior erroneous treatment
With respect to a taxpayer described in subparagraph (B) of this paragraph—
(i) there was an erroneous inclusion in, or omission from, gross income,
(ii) there was an erroneous recognition, or nonrecognition, of gain or loss, or
(iii) there was an erroneous deduction of an item properly chargeable to capital account or an erroneous charge to capital account of an item properly deductible.
(Aug. 16, 1954, ch. 736, 68A Stat. 338; Pub. L. 85–866, title I, § 59(a), Sept. 2, 1958, 72 Stat. 1647.)
§ 1313. Definitions
(a) DeterminationFor purposes of this part, the term “determination” means—
(1) a decision by the Tax Court or a judgment, decree, or other order by any court of competent jurisdiction, which has become final;
(2) a closing agreement made under section 7121;
(3) a final disposition by the Secretary of a claim for refund. For purposes of this part, a claim for refund shall be deemed finally disposed of by the Secretary—
(A) as to items with respect to which the claim was allowed, on the date of allowance of refund or credit or on the date of mailing notice of disallowance (by reason of offsetting items) of the claim for refund, and
(B) as to items with respect to which the claim was disallowed, in whole or in part, or as to items applied by the Secretary in reduction of the refund or credit, on expiration of the time for instituting suit with respect thereto (unless suit is instituted before the expiration of such time); or
(4) under regulations prescribed by the Secretary, an agreement for purposes of this part, signed by the Secretary and by any person, relating to the liability of such person (or the person for whom he acts) in respect of a tax under this subtitle for any taxable period.
(b) Taxpayer
(c) Related taxpayerFor purposes of this part, the term “related taxpayer” means a taxpayer who, with the taxpayer with respect to whom a determination is made, stood, in the taxable year with respect to which the erroneous inclusion, exclusion, omission, allowance, or disallowance was made, in one of the following relationships:
(1) husband and wife,
(2) grantor and fiduciary,
(3) grantor and beneficiary,
(4) fiduciary and beneficiary, legatee, or heir,
(5) decedent and decedent’s estate,
(6) partner, or
(7) member of an affiliated group of corporations (as defined in section 1504).
(Aug. 16, 1954, ch. 736, 68A Stat. 339; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
§ 1314. Amount and method of adjustment
(a) Ascertainment of amount of adjustmentIn 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—
(1) the sum of—
(A) 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
(B) the amounts previously assessed (or collected without assessment) as a deficiency, over—
(2) 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.
(b) Method of adjustment
(c) Adjustment unaffected by other items
(d) Taxes imposed by subtitle C
(Aug. 16, 1954, ch. 736, 68A Stat. 340; Pub. L. 85–866, title I, § 59(b), Sept. 2, 1958, 72 Stat. 1647; Pub. L. 89–44, title VIII, § 809(d)(5)(B), June 21, 1965, 79 Stat. 168; Pub. L. 91–172, title V, § 512(f)(7), (8), Dec. 30, 1969, 83 Stat. 641, 642; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 113–295, div. A, title II, § 221(a)(87), Dec. 19, 2014, 128 Stat. 4050.)
[§ 1315. Repealed. Pub. L. 94–455, title XIX, § 1901(a)(143), Oct. 4, 1976, 90 Stat. 1788]