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argues the payment is a rebate refund, subject to recovery by the
deficiency procedures.
We must determine the basis upon which respondent issued the
refund of $65,937 in the instant case. The answer to this
question depends upon what that payment represents. If the
payment is a refund related to the recalculation of petitioners'
1985 tax liability, then it constitutes a rebate. If the
payment, however, is unrelated to a recalculation of their tax
liability, then it is properly characterized as a nonrebate
refund. Clark v. United States, supra; O’Bryant v. United
States, supra; Groetzinger v. Commissioner, supra at 315 (1977).
Ultimately, we agree with respondent. As we discuss below, the
refund of $65,937 is a rebate within the meaning of section
6211(b)(2) because it is based on a recalculation of petitioners'
tax liability. Accordingly, the refund is subject to the
deficiency regime of sections 6211 through 6216.
Respondent's determination is presumed correct, and
petitioners bear the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111 (1933). Petitioners argue that
respondent did not have the authority, pursuant to section
6402(a), to issue the refund of $65,937 because petitioners did
not have an overpayment in taxable year 1985 when all of their
tax liabilities and overpayments for the year are considered.
Petitioners' argument assumes that respondent must view all
transactions together in determining whether an overpayment
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