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discount was 16.8 percent from the face value of the convertible
subordinated debentures, rather than 20 percent as reported on
the estate's 1980 income tax return. The District Court's
determination of the amount of the discount was accepted by the
Government and was not an issue on appeal. See Estate of Harrah
v. United States, supra at 1125.
The only issue before the Court of Appeals for the Ninth
Circuit was whether equitable recoupment would provide
jurisdiction for the court to consider the estate's and trust's
1983 and 1984 time-barred claims for refund of the income tax
paid on their sales of the Holiday Inns stock. See Estate of
Harrah v. United States, supra.
In deciding this issue, the Court of Appeals stated:
The "single transaction" requirement is but a
reflection of the requirement that recoupment by the
taxpayer on a time-barred claim is available only when
it is asserted defensively against a timely claim by
the government with respect to the same transaction. A
time-barred claim alone cannot provide jurisdiction to
remove that bar. [Id. at 1126.]
The Court of Appeals found that both the estate and marital
trust were seeking to employ equitable recoupment offensively as
the basis of jurisdiction, in a manner not countenanced by Bull
v. United States, supra, and United States v. Dalm, supra. See
id. at 1126. Further, the Court of Appeals found that the
estate's and trust's attempts to supply the required jurisdiction
by characterizing their efforts to reduce their 1983 and 1984
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