- 13 -
1993, by $1,860,621--the exact amount of the erroneous adjustment
Mr. Rosales made in the year ended June 30, 1991.)
C. Duty of Consistency
The duty of consistency (also known as the doctrine of quasi-
estoppel) prevents a party from benefiting in a subsequent year
from an error that was made in a prior year. See Southern Pac.
Transp. Co. v. Commissioner, 75 T.C. 497, 559-560 (1980). When the
duty of consistency applies, the taxpayer must recognize income
even though the earlier deduction was improper. Id. at 560.
The duty of consistency applies when: (1) The taxpayer made
a representation or reported an item for Federal income tax
purposes in one year, (2) the Commissioner acquiesced in or relied
on that representation or report for that year, and (3) the
taxpayer attempts to change that representation or report in a
subsequent year, after the period of limitations has expired with
respect to the year of the representation or report, and the change
is detrimental to the Commissioner. Herrington v. Commissioner,
854 F.2d 755, 758 (5th Cir. 1988), affg. Glass v. Commissioner, 87
T.C. 1087 (1986). When the duty of consistency applies, the
Commissioner may proceed as if the representation or report on
which the Commissioner relied continues to be true, although in
fact it is not. The taxpayer is estopped from taking a position to
the contrary. Herrington v. Commissioner, supra.
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