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immediately after the one providing the conditions under which a
correlative adjustment "shall actually be made". In that
context, the language merely describes the steps to be taken when
an appropriate correlative adjustment is "actually" being made.
Accordingly, we conclude that the phrase "shall decrease the
income of the other member" only applies when the district
director, after deciding that a correlative adjustment is
appropriate under the circumstances, "actually" makes the
correlative adjustment; such language does not mandate that the
district director, when increasing the income of one member of
the group, must always decrease the income of the other member.
As we held supra and in our prior opinion that LTD is not
entitled to deduct the section 482 allocations of income to INC
as additional compensation expenses because LTD failed to file
timely, true, and accurate returns pursuant to section 882(c)(2),
we conclude that correlative adjustments are not appropriate
under the circumstances of the instant case.
In our prior opinion, we addressed petitioners' argument
regarding double taxation and distinguished Collins Elec. Co. v.
Commissioner, 67 T.C. 911 (1977). Accordingly, we do not
reconsider our holding that LTD is not entitled to correlative
adjustments pursuant to section 1.482-1(d)(2), Income Tax Regs.,
for the taxable years in issue.
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