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Post-Assessment Determinations of the Amount of the
Threshold Underpayment
Commentators argued that the section 6621(c) rate
should not apply if it is determined after assessment
that the threshold underpayment is less than $100,000.
The section 6621(c) rate does not apply if, as a result
of a full or partial abatement of an assessment to
correct an administrative error on the part of the
Service, the taxpayer’s threshold underpayment does not
exceed $100,000. The final regulations also provide
that the section 6621(c) rate does not apply, if, as a
result of a court determination of the taxpayer’s
liability, the threshold underpayment is less than
$100,000. However, a net operating loss or credit
carryback does not reduce the amount of the threshold
underpayment for an earlier taxable period. [T.D.
8447, 1992-2 C.B. 313, 315; emphasis added.]
The heading of the paragraph indicates that this portion of
the preamble is referring to postassessment determinations that
potentially affect the amount of a threshold underpayment. In
such a situation, the preamble states that an NOL does not reduce
the amount of an underpayment for an earlier taxable period. The
instant case does not involve a postassessment determination.
Rather, at the time of the Court’s decision and the subsequent
assessment, the parties were fully aware of the NOL, and
petitioner’s liability for the tax year at issue was computed
with allowance for the NOL carryback.
The regulations do not state that a liability or threshold
underpayment is not adjusted to account for an NOL for purposes
of determining whether section 6621(c) applies. Rather, the
regulations generally provide that if the liability assessed by
respondent or decided by this Court does not exceed $100,000,
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