[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1311(b)-3]

[Page 631]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1311(b)-3  Existence of relationship in case of adjustment by 
way of deficiency assessment.

    (a) Except for cases described in paragraph (b) of Sec. 1.1312-3, 
no adjustment by way of a deficiency assessment shall be made, with 
respect to a related taxpayer, unless the relationship existed both at 
some time during the taxable year with respect to which the error was 
made and at the time the taxpayer with respect to whom the determination 
is made first maintained the inconsistent position with respect to the 
taxable year to which the determination relates. In the case of an 
adjustment by way of a deficiency assessment under the circumstance 
described in paragraph (b) of Sec. 1.1312-3 (where the maintenance of 
an inconsistent position is not required), the relationship need exist 
only at some time during the taxable year in which the error was made.
    (b) If the inconsistent position is maintained in a return, claim 
for refund, or petition (or amended petition) to the Tax Court of the 
United States for the taxable year in respect to which the determination 
is made, the requisite relationship must exist on the date of filing 
such document. If the inconsistent position is maintained in more than 
one of such documents, the requisite date is the date of filing of the 
document in which it was first maintained. If the inconsistent position 
was not thus maintained, then the relationship must exist on the date of 
the determination as, for example, where at the instance of the taxpayer 
a deduction is allowed, the right to which was not asserted in a return, 
claim for refund, or petition to the Tax Court, and a determination is 
effected by means of a closing agreement or an agreement under section 
1313(a)(4).

[T.D. 6500, 25 FR 12033, Nov. 26, 1960]