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section 1341. Here that tax is $8,338, which petitioner
previously reported and paid. The second step is to determine
the amount of the decrease in tax for the prior years, which
would result solely from the exclusion of the previously
reported, but now repaid, items. Petitioner's 1992 income tax
liability is then determined by subtracting the decrease in tax
in prior years (1975 through 1980) from $8,338. We know that the
decrease in tax from prior years exceeds $8,338. Therefore, we
know that there will be no tax liability for 1992 even though
petitioner has paid $8,338. It follows that petitioner has
overpaid its tax liability for 1992 by at least $8,338.
Section 1341(b)(1) prescribes the method for dealing with
the amount by which the decrease in tax for prior years exceeds
the tax for 1992 as computed with no section 1341 deduction. It
provides that "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 [1992], and shall be refunded or credited in the
same manner as if it were an overpayment for such taxable year."
Sec. 1341(b)(1). Respondent's position is that section
1341(b)(1) places a limit on the amount of any overpayment to
which petitioner is entitled.10 We disagree. Section 1341(b)(1)
10In the Written Statement In Support of Respondent's Rule
155 Calculation, respondent states:
Section 1341(b)(1) provides in pertinent part that 'if
the decrease in tax ascertained under subsection
(a)(5)(B) exceeds the tax imposed for the taxable year
(continued...)
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