80 T.C. 648">*649 1983 U.S. Tax Ct. LEXIS 99">*105 OPINION

This case is before the Court on respondent's motion for partial summary judgment and petitioner's cross-motion for partial summary judgment. These motions are now assigned to Special Trial Judge Fred S. Gilbert, Jr., for consideration and ruling thereon. After reviewing the record, the Court agrees with and adopts his opinion, which is set forth below. ¹

OPINION OF THE SPECIAL TRIAL JUDGE

Gilbert, Special Trial Judge: By notice of deficiency mailed June 2, 1978, respondent determined a deficiency in petitioner's Federal income tax for the taxable year 1972 in the amount of $ 298,861. The only issue for decision is whether the statute of limitations set forth in section 6501(a) ² bars the assessment and collection1983 U.S. Tax Ct. LEXIS 99">*106 of the deficiency determined by respondent.

All of the facts have been stipulated and are found accordingly. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.

The petitioner, a corporation organized under the laws of Delaware, maintained its principal office at One First National Plaza, Chicago, Ill., at the time the petition herein was filed. In accordance with extensions granted by the Internal Revenue Service, petitioner filed timely Federal income tax returns 80 T.C. 648">*650 for the taxable years 1972 and 1974 on May 17, 1973, and June 13, 1975, respectively.

Petitioner's 1974 return reflected a net capital loss in the amount of $ 981,428.28, and an unused investment credit in the amount of $ 7,698,175.14. As a result of these two items, petitioner filed an application for a tentative refund of tax (Form 1139) pursuant to1983 U.S. Tax Ct. LEXIS 99">*107 the "quick refund" provisions of section 6411. ³ The application requested tentative carryback adjustments based upon an allocation of the entire net capital loss and $ 1,647,896.85 of the unused investment credit from 1974 to 1971. The Internal Revenue Service allowed the carryback adjustments as requested by petitioner and, as a result thereof, refunded $ 1,942,325.33 of tax previously paid by petitioner for 1971.

1983 U.S. Tax Ct. LEXIS 99">*108 Neither the amount of either of the carryback adjustments nor the propriety of allowing either carryback to 1971 has ever been questioned by respondent or petitioner; both parties agree that the carrybacks reduced the 1971 tax imposed on petitioner by an amount equal to the 1971 tax refunded to petitioner. The disputed issue in this case instead concerns respondent's determination as to the effect of the carryback adjustments on the tax imposed under section 56 for the taxable year 1972, and the effect, if any, of the adjustments on the period of limitations on assessment of a deficiency for 1972.

In addition to the other taxes imposed under chapter 1 (the income tax), section 56 imposes a tax (the minimum tax) on certain items of tax preference described in section 57. As in effect during 1971 and 1972, section 56 provided, in relevant part:

SEC. 56(a). In General. -- In addition to the other taxes imposed by this chapter, there is hereby imposed for each taxable year, with respect to the 80 T.C. 648">*651 income of every person, a tax equal to 10 percent of the amount (if any) by which --

(1) the sum of the items of tax preference in excess of $ 30,000, is greater than

(2) the sum1983 U.S. Tax Ct. LEXIS 99">*109 of --

(c) Tax Carry Overs. -- If for any taxable year --

(1) the taxes imposed by this chapter * * * exceed

(2) the sum of the items of tax preference in excess of $ 30,000, then the excess of the taxes described in paragraph (1) over the sum described in paragraph (2) shall be a tax carryover to each of the 7 taxable years following such year. The entire amount of the excess for a taxable year shall be carried to the first of such 7 taxable years, and then to each of the other such taxable years to the extent that such excess is not used to reduce the amount subject to tax under subsection (a) for a prior taxable year to which [such] excess may be carried.

80 T.C. 648">*656 Featherston, J., concurring: I concur in both the result reached by the majority and the reasoning supporting its conclusion. I agree with the majority that, although section 6501(h) and (j) extends the1983 U.S. Tax Ct. LEXIS 99">*120 statute of limitations to permit the Commissioner to recover an erroneous refund made as a result of the application of a loss or credit carryback, that section is not applicable when a carryback has been correctly computed and applied. ¹ The result reached by the majority is also supported by legislative history which shows that only the year to which the carryback is applied may be reopened under section 6501(h) and (j). I wish only to add a few observations about this legislative history and mention some additional court decisions.

1983 U.S. Tax Ct. LEXIS 99">*121 Petitioner sustained a net capital loss and had an unused investment credit in 1974. Under the tentative carryback adjustment procedures of section 6411, the loss and credit were carried back to 1971, and a refund was made for that year. An audit confirmed the correctness of the 1971 refund, but respondent asks us to hold that section 6501(h) and (j) sanctions reopening 1972, a year otherwise closed by limitations to which the loss and unused credit were not carried, for the assessment of a section 56 minimum tax deficiency. To adopt respondent's argument would, in my opinion, require us 80 T.C. 648">*657 to give an expansive interpretation to the "attributable to" language in section 6501(h) and (j) which would disregard explicit legislative history and modify a longstanding interpretation of that section.

As I read the legislative history, the purpose of section 6501(h) and (j) is, where an excessive refund has been made pursuant to a tentative carryback adjustment application, to restore the Commissioner and the taxpayer to the same positions that they occupied prior to the approval of the application; ² that section thus does not apply where the taxpayer is entitled to retain the 1983 U.S. Tax Ct. LEXIS 99">*122 tentative refund. In adopting this legislation, the Congress did not leave it to the courts, as Judge Whitaker suggests, to achieve what they conceive to be a "rational result," but rather the Congress spoke in precise terms as to the results it wanted achieved and later dealt with specific problems as they arose. The Congress has never, in my opinion, authorized the reopening of an otherwise barred year for which no adjustment was made.

1983 U.S. Tax Ct. LEXIS 99">*123 Section 276(d) of the 1939 Code provided for an extended period of limitations on the assessment of deficiencies "attributable to" net operating loss carrybacks. Through inadvertence, Congress initially failed to include a successor to section 276(d) in the 1954 Code. This oversight was corrected by section 81(b) of the Technical Amendments Act of 1958, Pub. L. 85-866, 72 Stat. 1606, which added section 6501(h) to the Code. The accompanying Senate report explains:

(b) Years to which carrybacks are applied. -- A rule in the 1939 code provided that where a net operating loss was carried back to reduce the 80 T.C. 648">*658 income of an earlier year, any deficiency for that earlier year attributable to the carryback could be assessed at any time a deficiency for the subsequent year of the loss could be assessed. This rule, which was inadvertently omitted from the 1954 Code, was restored by the House bill. Thus, for example, if a 1956 loss is carried back to offset the income of 1954, a deficiency for 1954 could, in general, be assessed within 3 years after the return for 1956 was filed. Your committee has accepted this provision. [S. Rept. 1983, 85th Cong., 2d Sess. (1958), 1983 U.S. Tax Ct. LEXIS 99">*124 1958-3 C.B. 922, 1019; emphasis added.]

Thus, only the year to which the carryback has been applied is reopened for adjustment by section 6501(h). ³

Section 6501(h) initially dealt only with deficiencies attributable to net operating loss carrybacks. When, however, the Tax Reform1983 U.S. Tax Ct. LEXIS 99">*125 Act of 1969 amended section 1212(a) to allow corporations to carry back capital losses ⁴ and section 6411(a) to provide for the "same 'quickie' refund procedure in the case of the 3-year capital loss carrybacks as presently is available in the case of net operating loss carrybacks," ⁵ a corresponding amendment was made to section 6501(h) making that section applicable to deficiencies attributable to capital loss carrybacks as well as net operating loss carrybacks. ⁶ It is clear that the prior legislative history discussed above applies equally to net operating loss carrybacks and capital loss carrybacks, such as the one concerned in the present case. The premises on which Congress proceeded in enacting section 6501(h) -- that the rule of the 1939 Code was restored and that such rule provided for the assessment of a deficiency only for the year to which the loss was carried -- cannot be lightly ignored.

1983 U.S. Tax Ct. LEXIS 99">*126 In addition to a capital loss carryback, this case also concerns an investment credit carryback. Credit carrybacks are the subject of section 6501(j), which was added to the Code 80 T.C. 648">*659 by the Revenue Act of 1962, Pub. L. 87-834, 87th Cong., 2d Sess. The accompanying S. Rept. 1881, 87th Cong., 2d Sess. (1962), 1962-3 C.B. 707, 870-871, states:

Subsection (e) of section 2 of the bill, which was added to the bill by your committee, amends certain provisions of the code relating to statutes of limitations and interest. These amendments were made necessary by the adoption of the provision allowing a 3-year carryback of any unused investment credit.

Paragraph (1) of section 2(e) of the bill amends section 6501, relating to limitations on assessment and collection, to provide that in the case of a deficiency attributable to the application of an investment credit carryback, the deficiency may be assessed at any time before the expiration of the period within which a deficiency may be assessed for the taxable year in which the unused investment credit arose (i.e., the unused credit year) which results in such carryback. This provision in effect suspends1983 U.S. Tax Ct. LEXIS 99">*127 the statute of limitations on the assessment of a deficiency on account of the disallowance of an erroneous or improper investment credit carryback until the expiration of the statutory period of limitations on assessments attributable to the taxable year from which the investment credit carryback arose. [Emphasis added.]

Again, this section, like section 6501(h), was intended to raise the limitations bar only with respect to "the assessment of a deficiency on account of the disallowance of an erroneous or improper investment credit carryback." It was not intended to raise the bar with respect to other closed years or even with respect to other adjustments in the same year where, as in the instant case, the refund was correct and proper.

In recognition of the precision with which the Congress has spoken in this area, this Court in applying section 6501(h) and its 1939 Code predecessor has held that the period of limitations for the assessment of a deficiency for a year to which a net operating loss has been carried was enlarged only to the extent that the deficiency was based on an error made in the computation or application of the net operating loss carryback. The Court 1983 U.S. Tax Ct. LEXIS 99">*128 has rejected arguments that the period was enlarged for other adjustments even for the same year. Leuthesser v. Commissioner, 18 T.C. 1112">18 T.C. 1112 (1952); ⁷Bouchey v. 80 T.C. 648">*660 , 19 T.C. 1078">19 T.C. 1078, 19 T.C. 1078">1081-1082 (1953); Bunn's Auto Sales v. Commissioner, 35 T.C. 861">35 T.C. 861, 35 T.C. 861">864 (1961).

1983 U.S. Tax Ct. LEXIS 99">*129 Respondent here concedes that no error was made in the computation of the carryback from 1974 to 1971. He further concedes that the deficiency he here seeks is not for a year (1971) to which the carryback was applied, credited, or refunded. He seeks a deficiency for a year (1972), not otherwise affected by the carryback, on grounds other than a correction of the amount or application of the carryback adjustment. His position thus cannot be reconciled with the Leuthesser, Bouchey, and Bunn's Auto Sales cases.

The Congress relaxed the rule of these cases in 1966 to some extent by adopting section 6501(m). That section, which is specifically applicable to quick refunds under section 6411 such as the one concerned in the present case, authorizes the Commissioner to assess a deficiency for a year to which a capital loss or investment credit is carried at any time during the period of limitations for the year in which the loss or credit arose, just as he may do under subsections (h) and (j). Unlike assessments under subsections (h) and (j), however, which are limited to deficiencies attributable to the carryback, assessments under subsection (m) may be made for any reason. 1983 U.S. Tax Ct. LEXIS 99">*130 Jones v. Commissioner, 71 T.C. 391">71 T.C. 391, 71 T.C. 391">397 (1978). The amount of the assessment is, however, limited to the amount of the refund previously granted, less amounts which may be assessed under subsections (h) and (j). Furthermore, section 6501(m) expressly provides that it is only "for such prior taxable year," i.e., the year to which the carryback is applied, that the statute of limitations is to be extended. ⁸ This is entirely consistent with 80 T.C. 648">*661 the interpretation given above of the extension of the period of limitations under subsections (h) and (j).

1983 U.S. Tax Ct. LEXIS 99">*131 Herman Bennett Co. v. Commissioner, 65 T.C. 506">65 T.C. 506 (1975), provides no support for respondent. There, the taxpayer incurred a net operating loss in 1969 and claimed a carryback adjustment to 1966. The tentative allowance of the 1966 adjustment released a previously allowed investment credit (which audit showed had been earned in 1965 and carried over to 1966). The taxpayer then applied for a refund for 1963 based on having the released 1966 investment credit applied against its 1963 tax. The refund was granted but a notice of deficiency for 1963 was later mailed to the taxpayer within the limitations period applicable to 1969. This Court held that the notice of deficiency was timely, applying the specific language of section 6501(j). The facts of Bennett may be interpolated into the section as follows:

In the case of a deficiency [for 1963] * * * with respect to any portion of an investment credit carryback from a taxable year [1966] attributable to a net operating loss carryback or a capital loss carryback from a subsequent taxable year [1969], at any time before the expiration of the period within which a deficiency for such subsequent taxable1983 U.S. Tax Ct. LEXIS 99">*132 year [1969] may be assessed.

The portion of the statute quoted above was referred to in Bennett as the "second operative clause" of section 6501(j). That clause is not relevant to the present case, because petitioner's credit carryback from 1974 was not "released" by 80 T.C. 648">*662 the allowance of a loss carryback to that year. The credit carryback in this case is, therefore, in no sense "attributable to a net operating loss or capital loss carryback from a subsequent taxable year." If the period of limitations is to be reopened here under section 6501(j), then it must be under that section's first operative clause. In Bennett, however, we stated that the first operative clause "deals with the applicable limitations period where an investment credit carryback has been allowed erroneously." This is manifestly not the case here, because petitioner's right to carry his unused credit from 1974 back to 1971 is unchallenged.

Where Congress speaks in general terms, the courts may have some interpretative liberties to fill in the gaps left open to reach what they conceive to be equitable results in given cases. But where Congress speaks in definite and precise terms, the courts must1983 U.S. Tax Ct. LEXIS 99">*133 follow those terms. ⁹1983 U.S. Tax Ct. LEXIS 99">*134 As I read section 6501(h), (i), (j), (m), (o), and (p), relating to deficiencies, and the corresponding provisions of section 6511(d)(2)(A) and (B), (3) and (4), relating to refund claims, Congress has spoken definitely and precisely on the issue here presented. Almost every new carryback authorization (e.g., capital losses, investment credit, work incentive program credit, and new employee credit) has been accompanied by an amendment to these sections. ¹⁰ If respondent is correct in the instant case, 80 T.C. 648">*663 Congress did useless acts in adopting these amendments, because, under his view, the words "attributable to the carryback" are sufficient in substance to permit the Court to do what it conceives as equity regardless of the otherwise applicable statute of limitations. I agree with the majority that such is not the law. In order for the statute of limitations to be extended as respondent argues it should be in cases like this one, legislation, in my opinion, will be needed.

1983 U.S. Tax Ct. LEXIS 99">*135

Whitaker, J., dissenting: I respectfully dissent. The perspective with which one views the facts is particularly important in this case since in the final analysis we are called upon to determine the standard imposed by Congress on the right of the Commissioner to issue a deficiency notice in rather unique circumstances. We must interpret a post-World War II tax act, the Tax Adjustment Act of 1945 (Pub. L. 172, ch. 340, 59 Stat. 521) which was remedial in nature. ¹ As the report of the Committee on Ways and Means describes it, the purpose of the legislation was to facilitate reconversion from the war economy "by improving the cash position of business from some of the burdens of the excess-profits tax." ² One of the five specific purposes was to "Provide for speed-up of refunds resulting from 80 T.C. 648">*664 carry-backs of net operating losses and of unused excess-profits credits." But at the same time, Congress accompanied this speedup relief provision with mechanisms by which the Commissioner could secure repayment of any part of any refund erroneously made. In the case at bar, respondent is simply seeking to utilize the deficiency mechanism adopted as a corollary to1983 U.S. Tax Ct. LEXIS 99">*136 the "quickie refund" measure, whereas petitioner is seeking to retain an admittedly erroneous refund.

The majority and concurring opinions seem to emphasize that respondent is seeking to reopen a barred year unrelated to the carryback year; that the deficiency involves another tax in another year. I submit that this emphasis is misplaced. True it is that the deficiency is in minimum tax for the year 1972 whereas the carryback was to the year 1971. However, the 1972 adjustment is in fact an automatic mechanical adjustment due directly to the 1971 carryback. Since the 1971 income tax liability was reduced by the refund, the component of the minimum1983 U.S. Tax Ct. LEXIS 99">*137 tax liability calculation for 1972 consisting of the 1971 income tax paid obviously required adjustment to conform to the results of the 1971 refund. This is admitted. To avoid repaying to the United States an amount of tax conceded to be due, petitioner has sought an extremely narrow and restrictive interpretation of statutory language which is broadly worded. The majority, in my judgment, misconstrues section 6501(h) and (j).

This decision, if sustained, will force respondent to audit with extreme care future section 6411 refund claims with ensuing delay in order to avoid the possibility of an overpayment such as occurred here. Thus, the congressional intent clearly reflected in the Committee report accompanying the Tax Adjustment Act of 1945 will be defeated. Moreover, under the majority's rule, there are circumstances where a required automatic carryover reduction in the refund, as here called for, would be barred even though the gross refund must be allowed, an unconscionable result. ³

1983 U.S. Tax Ct. LEXIS 99">*138 80 T.C. 648">*665 It is my view that the statute of limitations changes which accompanied the "quickie refund" procedure, and those subsequently added, were intended by Congress to enable the Commissioner and the taxpayer, either or both, to recompute the tax liability of the taxpayer for every year affected by a net operating loss or a credit carryback, obviously the proper result. It is incumbent upon this Court to interpret procedural provisions of the Internal Revenue Code so as to achieve a rational result except where we are constrained by the statutory language itself, which is not the case here.

This case could in fact be disposed of very simply. Both sections 6501(h) and 6501(j) are involved. Both use identical language, insofar as here pertinent: "In the case of a deficiency attributable to the application to the taxpayer of a * * * carryback." ⁴ The issue is whether the reduction in the carryover amount of the 1971 income tax to 1972 is "attributable to the application to the taxpayer of" the net operating loss and investment credit carrybacks, both of which were effective to reduce petitioner's 1971 tax liability. In Herman Bennett Co. v. Commissioner, 65 T.C. 506">65 T.C. 506 (1975),1983 U.S. Tax Ct. LEXIS 99">*139 we concluded that the "attributable to" language of the second clause of section 6501(j) was satisfied where the adjustment "may be traced directly to" the carryback. These words, used in section 6501(h) and in both clauses of section 6501(j), must be construed alike. Even though the facts in Herman Bennett may not be comparable to the instant case, as Judge Featherston points out, we are committed to the concept that a deficiency is "attributable to" a carryback if it can be traced to the carryback. Can anyone deny that the 1972 increased tax can be "traced directly to" the carrybacks from 1974? If there were doubt as to the intendment of these words, one has but to look at the nearest dictionary. ⁵ But in the face of this plain 80 T.C. 648">*666 statutory language, the majority seeks comfort in legislative history in order to justify the result it reaches. As appellate courts have said: "Resort to legislative history has a place in judicial construction of statutes only when resort thereto is necessary to resolve a patent ambiguity in the language of the statute." ⁶ "Such aids [to interpretation] are only admissible to solve doubt and not to create it." ⁷ Moreover, I do not1983 U.S. Tax Ct. LEXIS 99">*140 believe that the majority correctly interprets the Committee report.

The Adjustment Act of 1945 added to the Code as parts of a single unified package a detailed mechanism for the filing and processing of "quickie" refunds, a procedure for summary reversal by the Commissioner of the allowance of such refunds, and various extensions of the1983 U.S. Tax Ct. LEXIS 99">*141 period of limitations both on taxpayer refund claims and IRS deficiencies. The many cross-references in the Committee report reflect the intended integration of the several parts. If we must look to the report for an indication of congressional intent, we are both entitled and required to construe it as a whole.

The refund claim procedure became new Code ⁸section 3780. Subsection (a) established the refund application and its scope. The report describes the scope of the "attributable to" language as follows:

Thus, if a taxpayer has a net operating loss or an unused excess profits credit in any taxable year ending on or after September 30, 1945, he may file an application for a tentative adjustment of the taxes for all prior taxable years affected by the net operating loss carry-back or the unused excess profits credit carry-back resulting from such loss or unused credit. A decrease in excess profits tax resulting from an unused excess profits credit carry-back which itself results from, or is increased in amount by, a net operating loss carry-back shall be considered to be attributable to such net operating loss carry-back. If a corporation has, e.g., a net operating loss1983 U.S. Tax Ct. LEXIS 99">*142 in the calendar year 1945 which when carried back to 1943 results in an unused excess profits credit, the decrease in excess profits tax for 1941 resulting from the unused excess profits credit carry-back from 1943 shall be considered to be attributable to the net operating loss carry-back from 1945. * * * [1945 C.B. at 580.]

While income and excess profits taxes were principally affected, 80 T.C. 648">*667 the report makes it clear that the statute embodies every tax affected by the carryback. ⁹

The obligation of the Commissioner under section 3780(b) is described in pertinent part as follows:

Within such period of 90 days the Commissioner is to make such limited examination of the application as he deems practicable for omissions and errors of computation therein. The Commissioner is then to determine the increase or decrease in any tax affected1983 U.S. Tax Ct. LEXIS 99">*143 by the carry-back upon the basis of the application and such examination. * * * In determining the increase or decrease in each tax affected by the carry-back, the Commissioner accordingly may correct any mathematical errors appearing on the application and he may likewise correct any adjustments required by law and incorrectly made by the taxpayer in computing its net operating loss, its unused excess-profits credit, the resulting carry-backs, or its net operating loss deduction or unused excess-profits credit adjustment. * * * Thus, if the taxpayer's application fails to take into account certain tax-free interest which he received in the year of the net operating loss, or in a prior year the taxes for which are affected by the carry-back, the Commissioner, * * * may take such tax-free interest into account in determining the increase and decrease in the taxes affected by the carry-back. * * * [1945 C.B. at 582; emphasis added.]

This language very plainly directs the Commissioner in checking the claim for refund based on the tentative carryback to recompute every tax affected by the carryback. The taxes to be recomputed are those1983 U.S. Tax Ct. LEXIS 99">*144 of any prior year affected by the carryback. The legislative history could hardly be made clearer. The fact that there was no minimum tax in the 1939 Code and no carryforward provision cannot prevent the 1954 Code equivalent from also reaching that adjustment.

In the instant case, the Commissioner should have recomputed petitioner's 1972 tax liability as well as his 1971 tax liability, for both were directly affected by the carryback, and he should have reduced the refund accordingly. The 1972 adjustment was inevitably mandated by the Code -- analogous to the classical mathematical error, which under section 6213(b) the Commissioner has long been authorized to correct by assessment without a statutory notice. ¹⁰1983 U.S. Tax Ct. LEXIS 99">*145 Petitioner clearly 80 T.C. 648">*668 recognized the propriety of this action since petitioner itself in its application for refund reduced the 1971 refund by the 1972 increase in tax. ¹¹

Section 3780(c), as added by the 1945 Act, gave the Commissioner a nonexclusive summary procedure for adjustment of any excessive refund allowed. As explained by the report:

In recognition of the fact that, due to the short period of time allowed, the Commissioner necessarily will act upon an application for a tentative carry-back adjustment only after a very limited examination, subsection (c) of section 3780 provides a summary procedure whereby the Commissioner and the taxpayer each may be restored to the same position occupied prior to the approval of such application. Subsection (c) provides that if the Commissioner determines that the amount applied, credited, or refunded with respect to an application for a tentative carry-back adjustment is in excess of the overassessment properly attributable to the carry-back upon which such application was based, he may assess the amount of the excess as a deficiency1983 U.S. Tax Ct. LEXIS 99">*146 as if such deficiency were due to a mathematical error appearing on the face of the return. * * * [1945 C.B. at 583.]

Application of this summary procedure is illustrated in the report by reference to two partially offsetting adjustments in a single year. However, the example in the Committee's discussion of section 3780(b), as quoted above, must be considered incorporated by reference. Thus under section 3780(c)the Committee intended that the Commissioner would have the power to correct recalculations of refunds of 1941 and 1943 taxes, all attributable to a 1945 net operating loss.

Finally, as again here pertinent the 1945 Act added to the 1939 Code as section 276(d) the predecessor of present section 6501(h), the language of which is instructive:

(d) Net Operating Loss Carry-Backs and Unused Excess Profits Credit Carry-Backs. -- A deficiency attributable to the application to the taxpayer of a net operating loss carry-back or an unused excess profits credit carry-back, including deficiencies which may be assessed pursuant to the provisions of section 3780(b) and (c), may be assessed at any time prior to the expiration of the period within which 1983 U.S. Tax Ct. LEXIS 99">*147 a deficiency may be assessed with respect to the taxable year of the claimed net operating loss or unused excess profits credit resulting in such carry-back. [1945 C.B. at 538.]

80 T.C. 648">*669 The express cross-reference to section 3780(c) confirms again the obvious scope of the statutory language itself, that this new extension of the deficiency procedure applied not just to the year to which the loss carryback was applied but also any other year to which the quickie refund claim related.

Judge Featherston's concurring opinion seeks support for his and the majority's unduly narrow interpretation of section 6501(h) and (j) in the language of the 1958 Committee reports ¹²1983 U.S. Tax Ct. LEXIS 99">*148 in that these two reports do describe the 1939 Code provisions in terms of a deficiency of the year to which the loss was carried back, but I construe that language as simply a generalized and abbreviated description of the most obvious application of the 1945 Act provisions. It certainly cannot serve to limit the actual and intended scope of the 1945 Act. Neither does it limit the scope of the 1958 amendment ¹³ which, as Judge Featherston points out, restored the 1939 Code rule.

The majority finds that three requirements must support a deficiency under section 6501(h) and (j): (i) The carryback must be erroneously applied, (ii) as a result, too much tax is refunded, and (iii) the deficiency must result from "an error in * * * the amount or existence of the loss or credit giving rise to the carryback." The authority cited for this interpretation is the legislative history, which offers no such support. Nor is this interpretation permissible under the decisions of this Court and other case law.

Under the majority's interpretation, the Commissioner would have no authority under section 6501(h) and (j) to determine a deficiency in the computation of the tax to be refunded, unless there is an error in the actual amount or existence of the loss or credit giving rise to the carryback or in the application of the carryback to the taxpayer. This result would be clearly erroneous as the majority would probably agree, for section 6501(h) and (j) authorizes the Commissioner, in determining the proper refund or credit, 1983 U.S. Tax Ct. LEXIS 99">*149 to adjust each tax affected by the carryback and to correct any mathematical 80 T.C. 648">*670 errors that thereby arise in order to arrive at the taxpayer's correct liability. ¹⁴ See, e.g., DuPont v. United States, 483 F. Supp. 588">483 F. Supp. 588 (D. Del. 1980). The requirement applied by the majority that the amount or existence of the carryback itself must be erroneous is unfounded. DuPont involved the minimum tax computation in the year to which the carryback was initially carried whereas here the carryback required a recomputation of the minimum tax liability for the succeeding year. It is difficult to visualize Congress' directing one but not the other.

1983 U.S. Tax Ct. LEXIS 99">*150 The majority insists that section 6501(h) and (j) does not include deficiencies attributable to carryovers but instead is restricted to deficiencies attributable to carrybacks. Thus, the majority concludes that the "attributable to" language of the two sections does not apply to an automatic adjustment in the minimum tax liability where the carryback causing that adjustment is applied in an earlier year. I suggest that such interpretation is neither required by the legislative history nor permissible under a decision of this Court, viz, Jones v. Commissioner, 71 T.C. 391">71 T.C. 391 (1978). See also Herman Bennett Co. v. Commissioner, 65 T.C. 506">65 T.C. 506 (1975).

Jones carried our interpretation of the "attributable to" language a rational step further than our decision in Bennett, in the context of section 6501(h). A 1970 net operating loss carryback to the year 1968 was allowed incorrectly pursuant to a claim filed under section 6411. The deficiency asserted for 1968 sought to recover the entire carryback refund. Petitioner, however, claimed that the 1968 deficiency resulting from the erroneous net operating loss should be reduced1983 U.S. Tax Ct. LEXIS 99">*151 so as to take into account an unused 1971 loss carryback which could not have been utilized so long as the 1970 loss carryback had been 80 T.C. 648">*671 allowed. The issue before us was not as to the propriety of the deficiency as it related to the erroneous 1970 carryback but rather whether petitioner was barred under these circumstances from taking advantage of the 1971 carryback in the recomputation of his 1968 tax liability. In Jones, after reciting that we had interpreted section 6501 (h) as precluding the Commissioner from assessing a deficiency except where it was related to "circumstances giving rise to the carryback or to the statutory machinery making the loss applicable to the year at issue," ¹⁵ we said that --

Although the 1971 net capital loss is not a part of the losses giving rise to the 1970 net operating loss carryback, it can be considered a part of the statutory machinery generally making losses applicable to the year at issue. The disallowance of the 1970 loss is so interrelated to the allowance of the 1971 loss that we find it difficult to separate the two. * * * And we find no good reason for doing so. * * * [71 T.C. 391">71 T.C. 399.]

1983 U.S. Tax Ct. LEXIS 99">*152

Similarly in this case, I find the 1972 adjustment to be inseparably related to the 1971 adjustment, so much so that it should not be, in fact it cannot be, separated therefrom. And I "find no good reason for doing so." As we said in Jones, this type of automatic adjustment is part of the statutory machinery.

The majority makes the point that section 6501(h) and (j) applies literally to "carrybacks" whereas the involvement of 1972 results from a "carryover." This is, however, a "red herring." It is immaterial how 1972 is involved or that it is a later year. These two sections refer to carrybacks as the original source of the adjustment only; the requirement is that the deficiency be "attributable to" a carryback. There is simply nothing in the statutory provisions which precludes respondent from predicating the deficiency on a carryforward adjustment so long as 1983 U.S. Tax Ct. LEXIS 99">*153 it can be "traced directly to" a carryback.

Both the majority and Judge Featherston's concurring opinion accuse respondent of seeking to reopen a closed year 80 T.C. 648">*672 for an adjustment not related to the carryback, a proposition which would be foreclosed by decisions of this Court. ¹⁶ This, too, is a "red herring." As I have pointed out, the year 1972 requires an automatic adjustment, not of any item of deduction or credit related to 1972 but simply to reduce the 1971 income tax figure incorporated into the 1972 minimum tax calculation to the corrected 1971 amount. That is not a reopening of a year for an adjustment unrelated to the carryback.

For the foregoing reasons, I would allow respondent's motion for partial summary judgment and would deny petitioner's cross-motion for partial1983 U.S. Tax Ct. LEXIS 99">*154 summary judgment.