- 25 -
in either the taxpayer’s or the Commissioner’s receiving a
benefit that would not have been available had a mistake been
corrected before a decision became final.21
This Court applies equitable principles in deciding the
amount of a deficiency, see Woods v. Commissioner, 92 T.C. 776,
784 (1989), or the amount of an overpayment. In Bachner v.
Commissioner, 109 T.C. 125, 131 n.7 (1997), we noted:
In a Tax Court proceeding, either party is free to
raise equity-based defenses to the assertions of the
other party, and the Court, insofar as it has
jurisdiction over the main claim, is free to entertain
those defenses. Estate of Mueller v. Commissioner, 101
T.C. 551, 557 (1993). Here, we have jurisdiction to
determine the overpayment under sec. 6512(b)(1) and,
therefore, respondent is free to raise the defense
provided in Lewis v. Reynolds, 284 U.S. 281 (1932).
* * *
However, as previously explained, once the decision in this case
specifying the amount of the overpayment became final, we lost
20(...continued)
provisions of the bill, and the committee is convinced
that to allow the reopening of the question of the tax
for the year involved either by the taxpayer or by the
Commissioner (save in the sole case of fraud) would be
highly undesirable.
See Estate of Bailly v. Commissioner, 81 T.C. 949, 955 n.10
(1983).
21For a discussion of the hardships that can result from the
rules governing finality, see Estate of Bailly v. Commissioner,
supra.
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