- 5 - prospective settlement of the partnership proceedings, pursuant to which the business energy investment credit would be disallowed for 1985, while a regular investment credit would be allowed for 1985 and then subject to recapture in 1986. Consistent with this settlement, respondent determined petitioners’ share of the investment credit for 1985 to be $114,000 and their recapture liability for 1986 to be $63,270. The settlement with Ethanol was finalized and decision was entered by this Court on May 19, 1994. Discussion This opinion is concerned only with the regular investment credit claimed by petitioners, which respondent for the most part allowed. The business energy investment credit which petitioners also claimed and which respondent disallowed is not at issue and may be disregarded. Petitioners’ main argument may be summarized as follows. There can be no liability for recapture of an investment credit that was not used. Use of an allowable investment credit is optional. Although petitioners originally claimed an investment credit on partnership section 38 property for the 1985 taxable year, they subsequently filed an amended return deleting the credit. By assessing the additional tax shown on the amended return, respondent allowed them to revoke their original claim. This left them in the same position as if they had never claimed the credit.3 Accordingly, when in 1986 3 Petitioners conveniently overlook the fact that when they recalculated their tax liability on the amended return for 1986, they neglected to delete the investment credit carryover that (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
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