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(1) Under section 1312(7)(A) the relevant determination must
determine the basis of the property;
(2) Under section 1312(7)(A) there must be a transaction on
which such basis depends or a transaction which was
erroneously treated as affecting such basis;
(3) In respect of a transaction mentioned in (2) above,
there must have occurred one of the errors listed in section
1312(7)(C) (namely, the erroneous inclusion in or exclusion
from gross income, an erroneous recognition or
nonrecognition of gain or loss, or an erroneous deduction of
an item properly chargeable to a taxpayer’s capital account
or an erroneous charge to a taxpayer’s capital account of an
item properly deductible).
(4) The error described in (3) above must have occurred with
respect to one of the taxpayers described in section
1312(7)(B).
As indicated, the narrow issue raised in petitioner’s motion
for summary judgment focuses on the first of the above
requirements (namely, whether the settlement agreement and/or the
Court's decision entered on March 30, 1995, "determined the
basis" of the properties as required by section 1312(7)(A)).
Generally, to constitute a determination under section
1313(a), a court decision must involve a substantive decision on
the merits of a case. See, for example, Commissioner v. Estate
of Weinreich, 316 F.2d 97, 103-104 (9th Cir. 1963), affg. in part
and revg. in part 37 T.C. 365 (1961), and Cotter v. Commissioner,
40 T.C. 506, 507-509 (1963), in which the courts rendered prior
affirmative opinions on the issue or on directly related issues,
which opinions were treated as final determinations under the
mitigation provisions.
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Last modified: May 25, 2011