[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: 26CFR1.1313(c)-1]

[Page 640]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1313(c)-1  Related taxpayer.

    An adjustment in the case of the taxpayer with respect to whom the 
error was made may be authorized under section 1311 although the 
determination is made with respect to a different taxpayer, provided 
that such taxpayers stand in one of the relationships specified in 
section 1313(c). The concept of related taxpayer has application to all 
of the circumstances of adjustment specified in Sec. 1.1312-1 through 
Sec. 1.1312-5 if the related taxpayer is one described in section 
1313(c); it has application to the circumstances of adjustment specified 
in Sec. 1.1312-6 only if the related taxpayer is one described in 
section 1313(c)(7); it does not apply in the circumstances specified in 
Sec. 1.1312-7. If such relationship exists, it is not essential that 
the error involve a transaction made possible only by reason of the 
existence of the relationship. For example, if the error with respect to 
which an adjustment is sought under section 1311 grew out of an 
assignment of rents between taxpayer A and taxpayer B, who are partners, 
and the determination is with respect to taxpayer A, an adjustment with 
respect to taxpayer B may be permissible despite the fact that the 
assignment had nothing to do with the business of the partnership. The 
relationship need not exist throughout the entire taxable year with 
respect to which the error was made, but only at some time during that 
taxable year. For example, if a taxpayer on February 15 assigns to his 
fiancee the net rents of a building which the taxpayer owns, and the two 
are married before the end of the taxable year, an adjustment may be 
permissible if the determination relates to such rents despite the fact 
that they were not husband and wife at the time of the assignment. See 
Sec. 1.1311(b)-3 for the requirement in certain cases that the 
relationship exist at the time an inconsistent position is first 
maintained.

[T.D. 6617, 27 FR 10824, Nov. 7, 1962]