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emphasizing that it is “a narrow exception” and should be applied
only when the following rationale prompting its development rings
true: “where a reversal would appear inevitable, due to the
clearly established position of the Court of Appeals to which an
appeal would lie, our obligation as a national court does not
require a futile and wasteful insistence on our view.” Lardas v.
Commissioner, 99 T.C. 490, 494-495 (1992).
Here, appeal would normally lie to the Court of Appeals for
the Eleventh Circuit. No reported decision from that court
addresses the issue of the Tax Court’s authority to afford relief
on the basis of an equitable recoupment defense. However, cases
decided by the Court of Appeals for the Fifth Circuit prior to
October 1, 1981, are considered binding precedent within the
Eleventh Circuit. See Bonner v. City of Prichard, 661 F.2d 1206,
1209 (11th Cir. 1981). Respondent contends that the 1977 Fifth
Circuit case of Continental Equities, Inc. v. Commissioner,
supra, is controlling for purposes of the instant matter.
Continental Equities, Inc. v. Commissioner, supra at 78-79,
involved a section 482 imputation of interest income to
Continental Equities, Inc., (Continental) from loans it had made
to four related corporations. A correlative interest expense was
deemed to have been allocated among the four related
corporations, but three of the four failed to file a timely
refund claim. See id. at 79. Continental argued that, in order
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