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Putting it another way, as a result of the carryback(s),
petitioners were deemed to have an overpayment as of January 1,
1982. As a result of the parties’ settlement in the deficiency
litigation, it developed that petitioners were not entitled to
the bulk of that overpayment. Because the overpayment and
interest were calculated with a starting date of January 1, 1982,
the resulting underpayment and interest also are calculated with
a starting date of January 1, 1982.
Petitioners’ contention that interest does not begin to
accrue until the date respondent issued to petitioners the refund
appears to hinge on the fact that they did not have actual use of
respondent’s money until the date respondent issued the refund.
Interest has been defined as compensation for the use or
forbearance of money. Deputy v. du Pont, 308 U.S. 488, 498
(1940). In this sense, the payment of interest serves as a proxy
for actual use of the money. Petitioners received interest on
their 1979 refund which began to accrue as of January 1, 1982.
Consistent with the definition of interest, petitioners are
treated as having had the use of respondent’s money (i.e., what
the parties agreed in their settlement papers was respondent’s
money) as of January 1, 1982, even though they did not have
actual use of the refunded dollars until respondent issued the
refund for 1979.
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