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Conclusion
Petitioner applied for tentative refunds based on CNOLs it
claimed for 1986. Respondent followed the letter of section 6411
and paid the tentative refunds exactly as petitioner requested
within 90 days of receiving the applications for tentative
carryback adjustments. Given the complexity of the restructuring
and spinoff, followed by the two sets of claims for tentative
refunds filed by two different taxpayers seeking to carry losses
back to the same tax years of the same affiliated group,
respondent might well have properly denied petitioner’s
application outright. Instead, respondent embraced the spirit of
section 6411 and provided petitioner with the quick infusion of
cash petitioner requested. After respondent determined that
petitioner was not entitled to retain the tentative refunds,
petitioner agreed to repay the tentative refunds to respondent,
depending on the outcome of Interlake Corp. v. Commissioner, 112
T.C. 103 (1999). But before the Court issued an opinion in
Interlake Corp. that Interlake was not required to repay them,
petitioner filed a petition in bankruptcy, preventing this Court
from entering a decision on the stipulation of settled issues.
Petitioner concocted a litigation strategy to avoid repaying the
tentative refunds it admitted it was not entitled to retain and
had agreed to repay. Petitioner went so far as to retain new
counsel to make the argument its old counsel had made in
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