- 11 - for each year, and the resulting tax decrease should be computed for each year. The total of these tax decreases for prior years is the amount that is available as a credit for 1992 pursuant to section 1341(a)(5)(B). Both parties agree that petitioner will be entitled to an overpayment as a result of applying section 1341(a)(5) and (b)(1), but they disagree about whether section 1341(b)(1) sets the limit on the amount of the overpayment. For purposes of applying section 1341(b)(1) to these cases, the "taxable year" is 1992. Section 1341(b)(1) provides in pertinent part that "If the decrease in tax ascertained under subsection (a)(5)(B) exceeds the tax imposed by this chapter for the taxable year (computed without the deduction) such excess shall be considered to be a payment of tax on the last day prescribed by law for the payment of tax for the taxable year, and shall be refunded or credited in the same manner as if it were an overpayment for such taxable year." Respondent argues that the amount of the overpayment for 1992 is limited to the amount described in section 1341(b)(1). Petitioner disagrees. Again, neither party cites any previous cases dealing with this issue, and we have found none. Section 1341 provides a method for determining the tax for a year in which a taxpayer repays items that had been reported as income in prior years under claim of right. Under section 1341(a)(5), the first step is to compute the tax for the taxable year (1992) without regard to any deduction allowable pursuant toPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011