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TITLE 26-INTERNAL REVENUE CODE (C) Prior erroneous treatment With 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 ac- count or an erroneous charge to capital account of an item properly deductible. (Aug. 16, 1954, ch. 736, 68A Stat. 338; Sept. 2, 1958, Pub. L. 85-866, title I, §59(a), 72 Stat. 1647.) AMENDMENTS 1958-Par. (6). Pub. L. 85-866 added par. (6) and re- designated former par. () as (7). Par. (7). Pub. L. 85-866 redesignated former par. (6) as (7). ErrcTivE DATE OF 1958 AMtmmmsr Section 59(c) of Pub. L. 85-866 provided that: "The amendments made by subsections (a) and (b) (to pars. (6) and (7) of this section and section 1314(c) of this title] shall apply to determinations (as defined in sec- tion 1313(a)) made after November 14, 1954." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 1311 of this title. § 1313. Definitions (a) Determination For purposes of this part, the term "determi- nation" means- (1) a decision by the Tax Court or a judg- ment, decree, or other order by any court of competent jurisdiction, which has become final; (2) a closing agreement made under section 7121; (3) a final disposition by the Secretary of a claim for refund. For purposes of this part, a claim for refund shall be deemed finally dis- posed of by the Secretary- (A) as to items with respect to which the claim was allowed, on the date of allowance of refund or credit or on the date of mailing notice of disallowance (by reason of offset- ting items) of the claim for refund, and (B) as to items with respect to which the claim was disallowed, in whole or in part, or as to Items applied by the Secretary in re- duction of the refund or credit, on expira- tion of the time for instituting suit with re- spect thereto (unless suit Is instituted before the expiration of such time); or (4) under regulations prescribed by the Sec- retary, an agreement for purposes of this part, signed by the Secretary and by any person, relating to the liability of such person (or the person for whom he acts) in respect of a tax under this subtitle for any taxable period.. (b) Taxpayer Notwithstanding section 7701(a)(14), the term "taxpayer" means any person subject to a tax under the applicable revenue law. (c) Related taxpayer For purposes of this part, the term "related taxpayer" means a taxpayer who, with the tax- payer with respect to whom a determination is made, stood, in the taxable year with respect to which the erroneous inclusion, exclusion, omis- sion, allowance, or disallowance was made, In one of the following relationships: (1) husband and wife, (2) grantor and fiduciary, (3) grantor and beneficiary, (4) fiduciary and beneficiary, legatee, or heir, (5) decedent and decedent's estate, (6) partner, or (7) member of an affiliated group of corpo- rations (as defined in section 1504). (Aug. 16, 1954, ch. 736, 68A Stat. 339; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834.) AMENDMENTS 1976-Subsec. (a)(3), (4). Pub. L. 94-455 struck out "or his delegate" following "Secretary", each place ap- pearing. SECTION REFERRED TO IN OTHER SECTIONS, This section is referred to in sections 1312, 1314 of this title. § 1314. Amount and method of adjustment (a) Ascertainment of amount of adjustment In computing the amount of an adjustment under this part there shall first be ascertained the tax previously determined for the taxable year with respect to which the error was made. The amount of the tax previously determined shall be the excess of- (1) the sum of- (A) the amount shown as the tax by the taxpayer on his return (determined as pro- vided in section 6211(b)(1), (3), and (4), re- lating to the definition of deficiency), if a return was made by the taxpayer and an amount was shown as the tax by the tax- payer thereon, plus (B) the amounts previously assessed (or collected without assessment) as a deficien- cy, over- (2) the amount of rebates, as defined in sec- tion 6211(b)(2), made. There shall then be ascertained the Increase or decrease In tax previously determined which re- sults solely from the correct treatment of the item which was the subject of the error (with due regard given to the effect of the item in the computation of gross income, taxable income, and other matters under this subtitle). A simi- lar computation shall be made for any other taxable year affected, or treated as affected, by a net operating loss deduction (as, defined in section 172) or by a capitalI loss carryback or carryover (as defined in section 1212), deter- mined with reference to the taxable year with respect to which the error.. was made. The amount so ascertained (together with any amounts wrongfully collected as additions to the tax or interest, as a result of such error) for each taxable year shall be the amount of the adjustment for that taxable year. Page 7/24 § 1313