26 U.S.C. § 1312

Circumstances of adjustment

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The circumstances under which the adjustment provided in section 1311 is authorized are as follows:(1) Double inclusion of an item of gross income

The determination requires the inclusion in gross income of an item which was erroneously included in the gross income of the taxpayer for another taxable year or in the gross income of a related taxpayer.

(2) Double allowance of a deduction or credit

The determination allows a deduction or credit which was erroneously allowed to the taxpayer for another taxable year or to a related taxpayer.

(3) Double exclusion of an item of gross income(A) Items included in income

The determination requires the exclusion from gross income of an item included in a return filed by the taxpayer or with respect to which tax was paid and which was erroneously excluded or omitted from the gross income of the taxpayer for another taxable year, or from the gross income of a related taxpayer; or

(B) Items not included in income

The determination requires the exclusion from gross income of an item not included in a return filed by the taxpayer and with respect to which the tax was not paid but which is includible in the gross income of the taxpayer for another taxable year or in the gross income of a related taxpayer.

(4) Double disallowance of a deduction or credit

The determination disallows a deduction or credit which should have been allowed to, but was not allowed to, the taxpayer for another taxable year, or to a related taxpayer.

(5) Correlative deductions and inclusions for trusts or estates and legatees, beneficiaries, or heirs

The determination allows or disallows any of the additional deductions allowable in computing the taxable income of estates or trusts, or requires or denies any of the inclusions in the computation of taxable income of beneficiaries, heirs, or legatees, specified in subparts A to E, inclusive (secs. 641 and following, relating to estates, trusts, and beneficiaries) of part I of subchapter J of this chapter, or corresponding provisions of prior internal revenue laws, and the correlative inclusion or deduction, as the case may be, has been erroneously excluded, omitted, or included, or disallowed, omitted, or allowed, as the case may be, in respect of the related taxpayer.

(6) Correlative deductions and credits for certain related corporations

The determination allows or disallows a deduction (including a credit) in computing the taxable income (or, as the case may be, net income, normal tax net income, or surtax net income) of a corporation, and a correlative deduction or credit has been erroneously allowed, omitted, or disallowed, as the case may be, in respect of a related taxpayer described in section 1313(c)(7).

(7) Basis of property after erroneous treatment of a prior transaction(A) General rule

The determination determines the basis of property, and in respect of any transaction on which such basis depends, or in respect of any transaction which was erroneously treated as affecting such basis, there occurred, with respect to a taxpayer described in subparagraph (B) of this paragraph, any of the errors described in subparagraph (C) of this paragraph.

(B) Taxpayers with respect to whom the erroneous treatment occurredThe taxpayer with respect to whom the erroneous treatment occurred must be—(i) the taxpayer with respect to whom the determination is made,(ii) a taxpayer who acquired title to the property in the transaction and from whom, mediately or immediately, the taxpayer with respect to whom the determination is made derived title, or(iii) a taxpayer who had title to the property at the time of the transaction and from whom, mediately or immediately, the taxpayer with respect to whom the determination is made derived title, if the basis of the property in the hands of the taxpayer with respect to whom the determination is made is determined under section 1015(a) (relating to the basis of property acquired by gift).(C) Prior erroneous treatmentWith respect to a taxpayer described in subparagraph (B) of this paragraph—(i) there was an erroneous inclusion in, or omission from, gross income,(ii) there was an erroneous recognition, or nonrecognition, of gain or loss, or(iii) there was an erroneous deduction of an item properly chargeable to capital account or an erroneous charge to capital account of an item properly deductible.(Aug. 16, 1954, ch. 736, 68A Stat. 338; Pub. L. 85–866, title I, § 59(a), Sept. 2, 1958, 72 Stat. 1647.)Editorial NotesAmendments

1958—Pars. (6), (7). Pub. L. 85–866 added par. (6) and redesignated former par. (6) as (7).

Statutory Notes and Related SubsidiariesEffective Date of 1958 Amendment

Pub. L. 85–866, title I, § 59(c), Sept. 2, 1958, 72 Stat. 1647, provided that: “The amendments made by subsections (a) and (b) [amending this section and section 1314 of this title] shall apply to determinations (as defined in section 1313(a)) made after November 14, 1954.”

Notes of Decisions

Cited in 26 cases, 1961–2013 · leading case: David A. Koss Freya B. Koss v. United States, 69 F.3d 705 (3rd Cir. 1995).

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David A. Koss Freya B. Koss v. United States, 69 F.3d 705 (3rd Cir. 1995). · cites it 4× “26 U.S.C. § 1312 (7)(A). They further contend that the determination resulted in an error described in section 1312(7)(C)(ii): (C) Prior erroneous treatment.”

Samuel M. Longiotti Betty C. Longiotti v. United States, 819 F.2d 65 (4th Cir. 1987). · cites it 3× “§ 1313 (a)(l)-(4); 2) the determination must fall within one of the circumstances of adjustment described in 26 U.S.C. § 1312 (l)-(7); and 3) depending on which circumstance of adjustment is found, either an inconsistent position must be maintained by the party against whom…”

Milton I. Schwartz Nina Schwartz v. United States, 67 F.3d 838 (9th Cir. 1995). · cites it 3× “§ 6511 (a) unless the mitigation statute, 26 U.S.C. § 1312 (1), or the doctrine of equitable recoupment excuses the time bar.”

Ora R. Hall & Edna Ione Hall, His Wife George E. Hall & Mary Ann McFall v. United States, 975 F.2d 722 (10th Cir. 1992). · cites it 5× “26 U.S.C. § 1312 is entitled “Circumstances of Adjustment” and describes the “circumstances under which the adjustment provided in section 1311 is authorized .”

Chertkof v. United States, 676 F.2d 984 (4th Cir. 1982). · cites it 4× “As the district judge has correctly pointed out, the sales or other dispositions triggering recognition of gain for income tax purposes in fiscal year 197Í, while evidently transactions, could not meet the statutory requirement because they would be transactions which depend on…”

Michael G. O'Brien v. United States, 766 F.2d 1038 (7th Cir. 1985). “26 U.S.C. § 1312 (7)(A). After close scrutiny of taxpayer’s predicament in relation to the numerous statutory requirements regarding basis problems, we are forced to conclude that taxpayer’s situation is not covered by the mitigation provisions.”

TLI, Inc. v. United States, 100 F.3d 424 (5th Cir. 1996). “26 U.S.C. § 1312 ; In the case of a determination described in section 1312(4) (relating to disallowance of certain deductions and credits), adjustment shall be made under this part only if credit or refund of the overpayment attributable to the deduction or credit described in…”

United States v. W. A. Rushlight, Raymond G. Rushlight, & W. A. Rushlight, of the Est. of Betty Rushlight, Deceased, 291 F.2d 508 (9th Cir. 1961). “In 1954, Section 3801(b) (5) was amended with the express intention of correcting this omission, 9 and Section 1312(6) of the 1954 Code, 26 U.S. C.A. § 1312(6), now permits adjustment for this type of error.”

Raleigh W. Hall & Margaret E. Hall v. United States, 111 Fed. Cl. 766 (Fed. Cl. 2013). · cites it 2× “§§ 1311-1315 ; Circumstance of Adjustment, 26 U.S.C. § 1312 OPINION & ORDER Futey, Judge.”

Last v. United States, 37 Fed. Cl. 1 (Fed. Cl. 1996). “§ 1313 (a)(l)-(4); (2) the determination must fall within one of the “circumstances of adjustment” described in 26 U.S.C. § 1312 (1) — (7); and (3) depending on which circumstance of adjustment is found, either an inconsistent position must have been maintained by the party…”

Brummett v. United States, 218 F. Supp. 2d 1253 (D. Or. 2002). · cites it 3× “For the mitigation provisions to apply, Plaintiffs must show: (1) a determination of erroneous tax treatment as defined by 26 U.”

Shuja Qureshi v. United States Internal Revenue Serv., 75 F.3d 494 (9th Cir. 1996). “…have been allowed to, but was not allowed to, the taxpayer for another taxable year, or to a related taxpayer.” 26 U.S.C. § 1312 (4).”

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— 26 U.S.C. § 1312(6) — 1 case

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