8
deficiencies assessed for the tax years 1982 and 1983 should be
offset by the alleged overpayment in 1984. We do not agree.
Equitable recoupment may apply in limited circumstances to
overcome the bar of the statute of limitations "to prevent
inequitable windfalls to either taxpayers or the Government that
would otherwise result from inconsistent tax treatment of a
single transaction, item, or event affecting the same taxpayer".
Estate of Mueller v. Commissioner, 101 T.C. 551, 552 (1993). In
United States v. Dalm, 494 U.S. 596, 608 (1990), the Supreme
Court stated:
our decisions in Bull and Stone stand only for the
proposition that a party litigating a tax claim in a timely
proceeding may, in the proceeding, seek recoupment of a
related, and inconsistent, but now time-barred tax claim
relating to the same transaction. In both cases, there was
no question but that the courts in which the refund actions
were brought had jurisdiction. To date, we have not allowed
equitable recoupment to be the sole basis for jurisdiction.
As petitioners have conceded, we do not have jurisdiction over
the computational assessments in this proceeding. Accordingly,
the doctrine of equitable recoupment does not apply.
In the alternative, petitioners argue that the mitigation
provisions, sections 1311 through 1314, apply in these
circumstances. Petitioners contend that the settlement agreement
reached with respect to the 1982 and 1983 taxable years of
Barrister Series 112 is a determination within the meaning of the
mitigation provisions. Petitioners further argue that the
disallowance of the investment credits claimed in 1982 and 1983
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