Union Carbide Corporation and Subsidiaries - Page 16

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          $23,111,671 for 1987, 1988, and 1989, respectively, subject to               
          any correlative adjustments to UCFSC's returns.  The foregoing               
          amounts are based on the portion of petitioner's FSC                         
          recomputations attributable to its section 861(b) expense                    
          adjustments, as alleged in petitioner's first amendment.                     
               As a further alternative argument, petitioner maintains                 
          that, if taxpayers must satisfy any dual limitations requirement             
          under the Regulation, the period applicable to the party in the              
          deficiency position must be based on section 6501 rather than                
          section 6511.  (The limitations periods contained in sections                
          6501 and 6511 are not uniformly parallel.)  In that connection,              
          petitioner argues that its claims for additional FSC commission              
          expenses for 1988 and 1989 in the amounts of $18,638,279 and                 
          $51,218,650 are timely because they were made within the periods             
          for petitioner to file claims for refund under section 6511 and              
          for respondent to assess correlative deficiencies against UCFSC              
          under section 6501(e)(1)(A) (the 6-year period of limitations                
          applicable to omissions from gross income in excess of 25 percent            
          of the gross income reported on the taxpayer's return).                      
          (Petitioner acknowledges that both of its claims for 1987, as                
          well as its revised claim for 1988, came after the 6-year period             
          of limitations had expired with respect to UCFSC for those years,            
          and are thus barred under this interpretation of the Regulation.)            
               Respondent argues, on the other hand, that petitioner's                 
          claims are proscribed by the plain language of the Regulation.               




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