Sunoco, Inc. and Subsidiaries - Page 16

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             section 6601 on an interim underpayment in petitioner’s                  
             account.  Overpayment interest is the interest computed                  
             under section 6611 on an interim overpayment in                          
             petitioner’s account.  Thus, the underpayment interest                   
             charged to, and the overpayment interest allowed on,                     
             petitioner’s account are both computed on the basis of the               
             balance of petitioner’s account as of a particular date.                 
                  Petitioner’s account balance, on any given date,                    
             is composed not only of the positive and negative                        
             transactions booked to petitioner’s account for the year,                
             such as assessments (positive) and payments (negative), but              
             also of the underpayment and overpayment interest that was               
             previously computed and combined with the account balance.               
             See section 6622(a), which provides that, for purposes of                
             the Internal Revenue Code, interest is “compounded daily.”               
                  If the account balance on a particular date were to                 
             change, by reason of a change in the amount or the date of               
             a transaction booked to the account, for example, then the               
             amount, and possibly the kind, of interest computed as of                
             that date would also change.  Any such change would ripple               
             through the account causing later interim balances, and the              
             interest computed thereon, to change, and further causing a              
             change in the aggregate amount of each type of interest;                 
             viz underpayment or overpayment.  Compare app. 1 with app.               

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Last modified: May 25, 2011