CCA 200946039: Mitigation of a double deduction

Plain-English summary

This Chief Counsel advice discusses whether the mitigation provisions could correct an apparent double allowance of a deduction. It explains that a final disposition of a refund claim may be a determination under § 1313(a)(3), and that allowing a refund could produce the same deduction in both earlier and later years. The writer identifies an inconsistent position under § 1311(b)(1)(B) and a possible adjustment under § 1312(2), assuming the relevant assessments were collected and a refund claim was filed. The email does not reach a final determination.

Ruling snapshot

• Question: Can the mitigation provisions correct a deduction allowed both in earlier and later tax years?
• Outcome: Advice given
• Key authorities: IRC §§ 1311, 1312, and 1313

Full text (IRS public release)

ID: CCA_2009092915504554 Number: 200946039
Release Date: 11/13/2009
Office: --------------
UILC: 1311.00-00

From: ----------------------
Sent: Tuesday, September 29, 2009 3:50:46 PM
To: --------------------
Cc: --------------------
Subject: FW: Barred Overassessment?

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---- forwarded me your question below. "Determination" is defined for mitigation purposes under sec. 1313(a)(3) as a final disposition by the Secretary of a claim for refund. In this situation, it appears as though the determination would allow a deduction for years 1, 2, and 3, and this deduction was also erroneously allowed to the taxpayer for years 4 and 5. This double allowance of a deduction is a circumstance of adjustment pursuant to section 1312(2). If the Secretary allows the taxpayer's claim for refund, the taxpayer would be claiming a deduction for these items both in years 1, 2, and 3 and years 4 and 5. Pursuant to section 1311(b)(1)(B), the Service would be adopting a position maintained by the taxpayer that is inconsistent with the erroneous allowance of the deduction in years 4 and 5. Therefore, there is an argument that mitigation would apply to correct the double allowance and assess for years 4 and 5, assuming that we actually collected the assessments and the taxpayers file a refund claim.

Please let me know if you have any further questions.

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