- 14 -
nevertheless "took" it, that is, used it to reduce his gross
income, and paid less tax as a result, and it was thus certainly
"allowed", in the plain meaning of those words. "To argue
otherwise is merely to play games with words." Bolten v.
Commissioner, 95 T.C. at 407.
The fallacy of petitioner's position herein becomes apparent
in the following context. Assume a scenario in which: (1) Only
petitioner's 1986 and 1988 returns had been audited and the CLD's
for those years had been disallowed and, after litigation, the
disallowances were sustained; (2) petitioner's 1987 return had
never been audited; and (3) petitioner had applied the decisions
in respect of 1986 and 1988 to the 1987 CLD in determining its
carryforward of suspended amounts under section 465(a)(2) and
obtained a refund for 1991 based on those carryforwards. There
can be no doubt that, in this scenario, the CLD was allowed for
1987, for purposes of the mitigation provisions. We think that
the situation in this case is no different. The inescapable fact
is that the determination that the $360,000 was properly reported
by petitioner in 1987 produced the result that the disallowance
of the CLD was negated because of the expiration of the period of
limitations and petitioner was left in the same position as he
would have been in if his 1987 return had never been audited.
In our analysis, we have kept in mind that the legislative
history contemplated the type of facts involved here: "disputes
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