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The question is really one of the order of application: If
we consider the adjustment that would result from recoupment as
occurring before the allowance of credit for tax on prior
transfers, then that adjustment doesn't cause affirmative
recovery, which would only result later; rather, it merely
cancels, in part, the Government's claim arising from the same
transaction, item, or event. Only if we consider the adjustment
from recoupment as occurring after the allowance of the credit
for tax on prior transfers would it cause affirmative recovery.
We aren't obliged to take that view of it, and the policy
considerations argue strongly against so taking it.
So long as petitioner is entitled to some unrelated credit,
however small, there would, under respondent's reasoning, be some
redetermined increased valuation of the shares at which
petitioner would cease to be entitled to any more than partial
recoupment, and another, lower but still increased, valuation at
which petitioner would cease to be entitled to any recoupment at
all. The same would be true of any refund actions that might
have occurred if the estate had paid the deficiency determined by
respondent and then sued for a refund. Under respondent's and
the majority's approach, any limitation on recoupment might only
become clear upon final disposition of a multi-issue case. And
this limitation on equitable recoupment would result from the
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