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Held, further: Before MI’s income tax deficiency
may be offset by the hospital tax in question, MI must
eliminate or back out the deduction for such hospital
tax that it claimed on its tax return for 1998.
Robert E. Dallman, Vincent J. Beres, and Robert J. Misey,
Jr., for petitioners.
Christa A. Gruber, J. Paul Knap, and Michael Calabrese, for
respondent.
SUPPLEMENTAL OPINION
MARVEL, Judge: This matter is before the Court on
petitioners’ objection to respondent’s proposed Rule 1551
computations submitted in response to our holdings in Menard,
Inc. v. Commissioner, T.C. Memo. 2004-207 (Menard I), and Menard,
Inc. v. Commissioner, T.C. Memo. 2005-3 (Menard II). As
discussed in greater detail below, in Menard I we held that
petitioners are liable for income tax deficiencies for the
taxable year ended (TYE) 1998. In Menard II we denied
petitioners’ motion for reconsideration.
The issue we must decide is whether, under the equitable
recoupment doctrine, petitioners are entitled to an offset
against their income tax liabilities for TYE 1998 equal to the
1Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all chapter,
subtitle, and section references are to the Internal Revenue
Code.
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