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mandatory and subsequent events could not excuse that obligation.
Id. at 861. In Auerbach Shoe Co. v. Commissioner, 21 T.C. 191,
196 (1953), affd. 216 F.2d 693 (1st Cir. 1954), we held that
The taxpayer is required to report the correct
amount of his income in filing a return. Where this is
not done due to the taxpayer's fraudulent conduct,
liability for the 50 per cent addition to the tax for
fraud is incurred and the unforeseen circumstance that
a carry-back later arises to offset the deficiency
should not operate to relieve the taxpayer of the
addition imposed for the fraud. * * * The liability for
the additions to the tax for fraud existed from the
time of the filing of the false and fraudulent return
with intent to evade tax. The addition is to be
measured by the deficiency, undiminished by any
subsequent credit or carry-back. [Emphasis added.]
The key fact relied upon in both C.V.L. Corp. v. Commissioner,
supra, and Auerbach Shoe Co. v. Commissioner, supra, was that the
event which reduced the original "underpayment" occurred after
the return at issue was filed. The fact that each taxable year
is a separate year for income tax purposes was not discussed, nor
was it relied upon, in any of the other cases cited by the
majority.3 Consequently, the principle upon which these NOL
carryback cases are based is applicable to the present case.
3The concept of separate taxable years is clearly not
determinative. We have stated that if the event creating the
deduction occurred in a separate prior year, the deduction would
be allowed to reduce the liability for the year at issue for
purposes of computing additions to tax. Blanton Coal Co. v.
Commissioner, T.C. Memo. 1984-397 ("The basic principle to be
found in prior case law would permit reduction for carryforward
loss deductions and credits, but prohibit carryback loss
deductions and credits, when computing additions to tax.").
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