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States, supra. Moreover, we apply equitable principles in cases
within our jurisdiction. See Woods v. Commissioner, 92 T.C. 776
(1989).
Petitioner also contends that the Court of Appeals for the
Ninth Circuit criticized the duty of consistency in Unvert v.
Commissioner, 656 F.2d 483, 486 n.2 (9th Cir. 1981), affg. 72
T.C. 807 (1979), as requiring case-by-case adjudication. In
Unvert, the taxpayers recovered an amount that they had
previously deducted. The deduction was improper when claimed.
The Court of Appeals rejected the erroneous deduction exception
to the tax benefit rule and required the taxpayer to report the
amount recovered as income to offset the prior improper
deduction. In that case, the Tax Court had relied on the duty of
consistency to hold the taxpayer to the prior, incorrect
representation and required the taxpayer to report the income.
Unvert does not stand for a rejection of the duty of consistency
by the Ninth Circuit as petitioner argues. Rather, Unvert
declined to recognize an exception to the tax benefit rule,
evidencing a liberal approach by the Ninth Circuit to equitable
principles in tax deficiency proceedings.
In Wentworth v. Commissioner, 244 F.2d 874 (9th Cir. 1957),
affg. 25 T.C. 1210 (1956), the Court of Appeals for the Ninth
Circuit applied certain equitable principles similar in operation
and effect to the duty of consistency doctrine in a tax
deficiency case. The taxpayer had received a corporate
distribution in a prior year and did not report the distribution
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