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ministerial act the same binding effect as a considered judgment
would make little sense as a practical matter.
Respondent’s ultimate rejection of petitioners’ amended
return for 1985 was entirely proper. The ability of a taxpayer
to amend his return creates administrative problems for a tax
system in which determination and assessment of taxes are
predicated on the annual accounting principle. Pacific Natl. Co.
v. Welch, 304 U.S. 191, 194 (1938); Bartlett v. Delaney, 173 F.2d
535 (1st Cir. 1949). Allowing the taxpayer to use the benefit of
hindsight to select the most favorable set of intertemporal tax
consequences for his transactions would be highly prejudicial to
the revenue. Melahn v. Commissioner, supra at 776-777.
Accordingly, the case law recognizes limits on the effectiveness
of amended returns, generally. Koch v. Alexander, 561 F.2d 1115,
(...continued)
of 150 days after the FPAA is mailed to the tax matters partner.
Sec. 6225. A “deficiency” for purposes of sec. 6225 means the
excess of tax due over the amount shown on the original return
plus any additional amount shown as tax on an amended return,
“other than amounts of additional tax which such return clearly
indicates the taxpayer is protesting rather than admitting.”
Sec. 301.6211-1(a), Proced. & Admin. Regs. Treatment of the
investment credits had been a matter of controversy during the
audit of Ethanol and was the subject of adjustments in the FPAA.
On their amended returns for 1985 and 1986 petitioners explained
that their purpose in seeking to revoke the credit was merely to
stop the interest charges, not to concede liability.
Consequently, it appears that the assessed amounts should have
been treated as part of the deficiency attributable to a
partnership item. See Powerstein v. Commissioner, 99 T.C. 466
(1992). Yet respondent assessed these amounts only 125 days
after issuing the FPAA. If respondent’s assessments with respect
to the amended returns exceeded the scope of her authority, the
argument that these assessments validated petitioners’ amended
returns becomes all the more dubious.
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