Fruit of the Loom, Inc. v. Commissioner

MANION, Circuit Judge.

In 1966 a predecessor to Fruit of the Loom sold assets to a purchaser that ultimately failed to pay $19 million. The loss justified a tax deduction. The problem here is that the IRS claims the company, due partly to procedural mishaps, was able to realize the full deduction twice, resulting in a “double counting.” We consider whether the Internal Revenue Service can invoke the mitigation provisions of the Internal Revenue Code to collect additional taxes, from taxpayer to rectify this “double counting” by assessing a tax *1340deficiency which otherwise would be barred by the…