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(4) the party who prevailed in the determination
maintained a position that was adopted there and that was
inconsistent with the erroneous treatment. Sec. 1311(b).
If the mitigation provisions apply, the taxable income for the
year of the error may be adjusted under section 1314. Sec.
1311(a). Having invoked the mitigation provisions, respondent
bears the burden of proving that each of the four requirements
has been met. Fruit of the Loom, Inc. v. Commissioner, 72 F.3d
at 1341.
Initially, we think it clear that there was an error in
that, as a result of our decision in Hagestad v. Commissioner,
T.C. Memo. 1993-300, petitioner in fact received the benefit of a
CLD for 1987. It is equally clear under section 465(a)(1) that
petitioner was not entitled to the CLD for 1987, and indeed
petitioner so concedes. It is also clear that the correction of
that error is barred by the normal 3-year period of limitations.
Thus, the first of the above-stated elements is present.
Turning to the second element, a "determination" within the
meaning of section 1313(a) includes "a final disposition by the
Secretary of a claim for refund". Sec. 1313(a)(3). Petitioner
concedes that the 1995 refund is such a determination for the
purposes of the mitigation provisions. The determination must
also be with respect to the item giving rise to the error. Sec.
1311(a); sec. 1.1311(b)-1, Income Tax Regs.; cf. B.C. Cook &
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