CODIFICATION OF INTERNAL REVENUE LAWS beneficiary; (D) fiduciary and beneficiary, legatee, or heir; (E) decedent and decedent's estate; or (F) partner. (b) CIRCUMSTANCES OF ADJ-USTMENT. -When a determination un- der the income tax laws- (1) Requires the inclusion in gross income of an item which was erroneously included in the gross income of the taxpayer for another taxable year or in the gross income of a related taxpayer; or (2) Allows a deduction or credit which was erroneously allowed to the taxpayer for another taxable year or to a related taxpayer; or (3) Requires the exclusion from gross income of an item with respect to which tax was paid and which was erroneously excluded or omitted from the gross income of the taxpayer for another tax- able year or from the gross income of a related taxpayer; or (4) Allows or disallows any of the additional deductions allow- able in computing the net income of estates or trusts, or requires or denies any of the inclusions in the computation of net income of beneficiaries, heirs, or legatees, specified in section 162 (b) and (c) of chapter 1, and corresponding sections of prior revenue Acts, and the correlative inclusion or deduction, as the case may be, has been erroneously excluded, omitted, or included, or disallowed, omitted, or allowed, as the case may be, in respect of the related taxpayer; or (5) Determines the basis of property for depletion, exhaustion, wear and tear, or obsolescence, or for gain or loss on a sale or exchange, and in respect of any transaction upon which such basis depends there was an erroneous inclusion in or omission from the gross income of, or an erroneous recognition or nonrec- ognition of gain or loss to, the taxpayer or any person who ac- quired title to such property in such transaction and from whom mediately or immediately the taxpayer derived title subsequent to such transaction- and, on the date the determination becomes final, correction of the effect of the error is prevented by the operation (whether before, on, or after May 28, 1938) of any provision of the internal-revenue laws other than this section and other than section 3761 (relating to compromises), then the effect of the error shall be corrected by an adjustment made under this section. Such adjustment shall be made only if there is adopted in the determination a position maintained by the Commissioner (in case the amount of the ad- justment would be refunded or credited in the same manner as an overpayment under subsection (c) ) or by the taxpayer with respect to whom the determination is made (in case the amount of the ad- justment would be assessed and collected in the same manner as a deficiency under subsection (c) ), which position is inconsistent with the erroneous inclusion, exclusion, omission, allowance, disallowance, recognition, or nonrecognition, as the case may be. In case the amount of the adjustment would be assessed and collected in the same manner as a deficiency, the adjustment shall not be made with re- spect to a related taxpayer unless he stands in such relationship to the taxpayer at the time the latter first maintains the inconsistent position in a return, claim for refund, or petition (or amended peti- tion) to the Board of Tax Appeals for the taxable year with respect to which the determination is made, or if such position is not so maintained, then at the time of the determination. (c) MeTHOD Or ADJrsrTMNT.- T he adjustment authorized in sub- section (b) shall be made by assessing and collecting, or refunding or crediting, the amount thereof, to be ascertained as provided in sub- section (d), in the same manner as if it were a deficiency determined by the Commissioner with respect to the taxpayer as to whom the 472
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