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recomputed the group’s tax liability for 1981 and 1984. Had
petitioner’s recomputation of tax liability been correct, i.e.,
had it actually sustained the CNOL claimed on its 1986 return and
properly carried it back to 1984 and 1981, it would have been
entitled to retain the tentative refunds.7
Petitioner contends that, even though it recomputed the
group’s tax liability on the applications for tentative carryback
adjustments, the tentative refunds were paid to the “wrong
taxpayer” by accident and that any refund paid to the wrong
taxpayer is a nonrebate refund. Petitioner’s conclusory argument
is premised on the finding that, at the time the tentative
refunds were paid, it was settled that Interlake was the
continuing common parent of the prespinoff group and that
respondent paid petitioner by mistake.
7The tax indemnification agreement would not alter this
result. Par. 6(a) provides that if petitioner realizes a net
operating loss or credits that may be carried back to taxable
years ending before Dec. 31, 1986, Interlake, to the extent it
receives any refund from respondent, shall within 10 days of
receiving the refund pay petitioner the amount of the refund,
plus interest.
The foregoing language of the tax indemnification agreement
makes it clear that, as a matter of contract law, petitioner was
entitled to the tentative refund that it applied for and that was
paid to it. Even if respondent never took the position that
petitioner was the common parent and issued the refund to
Interlake, Interlake would have been obligated to pay the refund
over to petitioner within 10 days, in which case petitioner would
have occupied the exact same economic position it is in today.
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