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then hot interest does not apply. As explained earlier, the
assessment date is generally the operative date for purposes of
determining whether there is a large corporate underpayment and
hot interest applies. If the liability is subsequently
redetermined by a Federal court, then the operative date is when
the judicial determination is made. Because petitioner did not
have a threshold underpayment of tax exceeding $100,000 after
this Court’s decision or on the assessment date, section 6621(c)
does not apply.14
Respondent’s arguments in this case focus on petitioner’s
liability as of the return due date, without reference to any
future events that might ultimately reduce petitioner’s liability
for the taxable year. This is consistent with the general rule
of section 6601(d) that if the amount of income tax is reduced by
the carryback of NOLs and capital losses, the reduction does not
affect the computation of interest for the period ending with the
filing date for the taxable year in which the NOL or capital loss
arose. However, unlike normal interest, hot interest does not
start to accrue until the applicable date.15 This distinguishes
14We leave to another day whether an NOL carryback
determination made postassessment or after a final judicial
determination would affect the existence or amount of a threshold
underpayment of tax.
15The legislative history of sec. 6621(c) indicates that
Congress was concerned that corporations were allowed to deduct
interest on tax obligations but that individuals were not.
(continued...)
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