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For 1972 through 1978, after paying the agreed tax
deficiencies determined by respondent on audit and the interest
due thereon, Exxon filed with respondent a number of claims for
refund relating to unrelated items of income, expense, and
credit, which claims for refund for a number of the years exceed
the amounts paid by Exxon as tax deficiencies relating to the
agreed adjustments for each year.
As indicated, however, petitioners did not contest, through
protests or refund claims, the adjustments relating to the four
major agreed adjustments or the adjustments relating to the other
agreed adjustments.
For financial accounting purposes, Exxon accrued ratably for
each year interest on estimated net tax deficiencies.
Accrual of Deficiency Interest on
Exxon’s Income Tax Returns
Exxon’s consolidated corporation income tax returns for 1972
through 1978 were prepared on the accrual method of accounting,
and Exxon used the accrual method of accounting to accrue
interest expense.
On its consolidated corporation income tax returns as filed
for 1972 through 1978, Exxon did not accrue ratably interest on
the income tax deficiencies that respondent determined for each
year until the underlying and related tax deficiencies were set
forth in agreed Forms 870, in closing agreements, or until the
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