- 10 -
dealing with an item of income. However, both deductions and
omissions affect the determination of taxable income.
Consequently, we think that any distinction based on a "same
item" argument is a distinction without a difference. In short,
we are satisfied that the second element enunciated in Fruit of
the Loom, Inc. v. Commissioner, supra, has been satisfied.
Finally, we turn to the third and fourth elements enunciated
in Fruit of the Loom test. These elements require that there be
a double deduction, section 1312(2), and that petitioner have
maintained inconsistent positions with respect to the deduction,
section 1311(b). That is, the carryforward of a portion of the
CLD to 1991 must be inconsistent with the "treatment accorded"
that portion in 1987. Sec. 1.1311(b)-1(a), Income Tax Regs.
Since it is clear that a portion of the CLD was allowed in 1991
by the 1995 refund, we would have to find that that portion of
the deduction had also been allowed in 1987 for the mitigation
provisions to apply. Thus, the decision in this case turns on
what exactly was the "treatment accorded" the deduction in 1987--
was it allowed or not?
If it was allowed, this would be the "erroneous treatment"
needed to invoke the mitigation provisions, the determination
would reflect a case of double deduction, one of the enumerated
circumstances of adjustment, section 1312(2), and the facts of
this case would fit squarely under the prohibition against double
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011