Estate of Harry Orenstein - Page 13




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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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