- 18 -
F.2d 1007 (5th Cir. 1979). The repayment of those balances to
petitioner would constitute a recovery or an event fundamentally
inconsistent with the premise of the original offsetting against
gross receipts of the payments into the BUF accounts, triggering
application of the tax benefit rule.8 Hillsboro Natl. Bank v.
Commissioner, 460 U.S. 370, 383-384 (1983); sec. 1.111-1(a)(2),
Income Tax Regs. Consequently, petitioner's practice of
offsetting against gross receipts payments into the BUF accounts
in issue constitutes a method of accounting, and the change in
that practice is a change in method of accounting. Accordingly,
an adjustment may be made pursuant to section 481(a) to prevent
8 We note that this Court does not require a taxpayer to
include in income the recovery of an amount that was improperly
deducted in a prior year for which the period of limitations has
expired. 885 Inv. Co. v. Commissioner, 95 T.C. 156, 165 (1990).
Several Circuit Courts of Appeals, including the Ninth, to which
an appeal of the instant case would lie (barring stipulation to
the contrary), have rejected the so-called erroneous deduction
exception to the tax benefit rule. Id. Accordingly, pursuant to
the rule of Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445
F.2d 985 (10th Cir. 1971), we apply the law as announced by the
Court of Appeals for the Ninth Circuit. Consequently, for
purposes of the instant case, the recovery of the payments into
the BUF accounts would be included in petitioner's income
pursuant to the tax benefit rule notwithstanding that the offsets
against gross receipts claimed for those payments were improper.
Unvert v. Commissioner, 656 F.2d 483, 485-486 (9th Cir. 1981),
affg. 72 T.C. 807 (1979).
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