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(3) the amount of such deduction exceeds
$3,000,
then the tax imposed by this chapter for the
taxable year shall be the lesser of the
following:
(4) the tax for the taxable year
computed with such deduction; or
(5) an amount equal to–-
(A) the tax for the taxable year
computed without such deduction, minus
(B) the decrease in tax under this
chapter * * * for the prior taxable year (or
years) which would result solely from the
exclusion of such item (or portion thereof)
from gross income for such prior taxable year
(or years).
Section 1341 was enacted by Congress to mitigate the
sometimes harsh results of the application of the claim of right
doctrine. See United States v. Skelly Oil Co., 394 U.S. 678, 681
(1969). Under that doctrine, a taxpayer must recognize income
for an item in the year it is received under a claim of right
even if it is later determined that the right of the taxpayer to
the item was not absolute and it is returned in a subsequent
year. See North Am. Oil Consol. v. Burnet, 286 U.S. 417, 424
(1932). Although the taxpayer is allowed to take a deduction in
the year of return for the amount of the item, the deduction
would fail to make the taxpayer whole if the applicable tax rate
was higher in the year of recognition than it was in the year of
return. See United States v. Skelly Oil Co., supra. Section
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