[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: 26CFR1.1312-4]

[Page 633]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1312-4  Double disallowance of a deduction or credit.

    (a) Paragraph (4) of section 1312 applies if the determination 
disallows a deduction or credit which should have been, but was not, 
allowed to the same taxpayer for another taxable year or to a related 
taxpayer for the same or another taxable year. This is one of the two 
circumstances in which the maintenance of an inconsistent position is 
not a requirement for an adjustment but the requirements in paragraph 
(b) of Sec. 1.1311(b)-2 must be fulfilled (correction not barred at 
time of erroneous action).
    (b) The application of paragraph (a) of this section may be 
illustrated by the following examples:

    Example 1. The taxpayer, A, who computes his income by use of the 
accrual method of accounting, deducted in his return for the taxable 
year 1951 an item of expense which he paid in such year. At the time A 
filed his return for 1951, the statute of limitations for 1950 had not 
expired. Subsequently, the Commissioner asserted a deficiency for 1951 
based on the position that the liability for such expense should have 
been accrued for the taxable year 1950. In 1955, after the period of 
limitations on refunds for 1950 had expired, there was a determination 
by the Tax Court disallowing such deduction for the taxable year 1951. A 
is entitled to an adjustment for the taxable year 1950. However, if such 
liability should have been accrued for the taxable year 1946 instead of 
1950, A would not be entitled to an adjustment, if a credit or refund 
with respect to 1946 was already barred when he deducted such expense 
for the taxable year 1951.
    Example 2. The taxpayer, B, in his return for 1951 claimed a 
deduction for a charitable contribution. The Commissioner asserted a 
deficiency for such year contending that 50 percent of the deduction 
should be disallowed, since the contribution was made from community 
property 50 percent of which was attributable to B's spouse. The 
deficiency is sustained by the Tax Court in 1956, subsequent to the 
period of limitations within which B's spouse could claim a refund with 
respect to 1951. An adjustment is permitted to B's spouse, a related 
taxpayer, since a refund attributable to a deduction by her of such 
contribution was not barred when B claimed the deduction.

[T.D. 6500, 25 FR 12034, Nov. 26, 1960]