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Conclusion
In sum, in the circumstances of this case, equitable
recoupment properly would only be allowed as an offset against
(and only up to the amount of) the deficiency as we would have
redetermined it in the absence of the previously taxed property
credit. The previously unclaimed credit that respondent allowed
has no bearing on the issue arising out of the date-of-death
valuation of the shares, and should also be paid to petitioner.
Thus, petitioner should be paid in the end the amount
a = c - (d - r)
(d $ r),
where a is the amount of the overpayment to be paid, c is the
credit for the tax on prior transfers that respondent allowed in
the statutory notice, d is the deficiency as we would have
redetermined it if the credit had been claimed on the estate tax
return or paid administratively, and r is the offset to that
41(...continued)
the same years to judgment and then voluntarily agreed to the
dismissal of its claims. The Court of Appeals held that there
was no basis for jurisdiction over the counterclaim and therefore
remanded the case to the District Court with a direction to
dismiss the counterclaim. In the discussion of equitable
recoupment, which the parties agreed was not available to the
taxpayers in the case, there is mention that the single-
transaction requirement was not satisfied. There is, however, no
mention of any no-affirmative-recovery requirement, in the
discussion of either equitable recoupment or the counterclaims.
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