Lucian T. Baldwin, III - Page 42

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               A.   The Duty of Consistency                                           
               The duty of consistency, sometimes referred to as quasi-               
          estoppel, is an equitable doctrine that Federal courts                      
          historically have applied in appropriate cases to prevent unfair            
          tax gamesmanship.  Kielmar v. Commissioner, 884 F.2d 959, 965               
          (7th Cir. 1989), affg. Glass v. Commissioner, 87 T.C. 1087                  
          (1986); Cluck v. Commissioner, 105 T.C. 324 (1995); LeFever v.              
          Commissioner, 103 T.C. 525 (1994), affd. 100 F.3d 778 (10th Cir.            
          1996).  The duty of consistency doctrine “is based on the theory            
          that the taxpayer owes the Commissioner the duty to be consistent           
          in the tax treatment of items and will not be permitted to                  
          benefit from the taxpayer’s own prior error or omission.”  Cluck            
          v. Commissioner, supra at 331.  It prevents a taxpayer from                 
          taking one position on one tax return and a contrary position on            
          a subsequent return after the limitations period has run for the            
          earlier year, if such contrary position would harm the                      
          Commissioner.  Id.                                                          
               This case is appealable to the Court of Appeals for the                
          Seventh Circuit.  In Kielmar v. Commissioner, supra at 965, the             
          Court of Appeals for the Seventh Circuit held that a taxpayer is            
          placed under a duty of consistency when there has been:  (1) A              
          representation or report by the taxpayer; (2) on which the                  
          Commission has relied; and (3) an attempt by the taxpayer after             
          the period of limitations has run to change the previous                    
          representation or to recharacterize the situation in such a way             

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