## Facts

- Robert S. Gill (taxpayer) operated Gill Printing and Stationery Company as a sole proprietor.
- The business kept its books on a fiscal year running from May 1 through April 30, but Gill filed his individual federal income tax returns on a calendar-year basis.
- Gill nonetheless reported his business income on his calendar-year returns using the business’s fiscal-year results. For example, on his 1949 return he included business income earned from May 1, 1948 through April 30, 1949.
- Gill later sought a refund for 1949, recomputing his 1949 tax to exclude the portion of business income earned in 1948 (and, as part of his overall recomputation approach, shifting income to better match calendar-year reporting).
- The IRS denied the refund, and Gill litigated. In *Gill v. United States*, 258 F.2d 553 (5th Cir. 1958), the Fifth Circuit agreed with Gill that his 1949 tax had to be computed on a calendar-year basis.
- The Fifth Circuit’s opinion in the 1958 case issued on July 18, 1958, and the mandate issued on September 29, 1958.
- After the 1958 mandate, the IRS recomputed Gill’s 1948 tax year to include the business income that the 1958 decision required to be excluded from 1949.
- Because the normal limitations period for 1948 had expired, the IRS relied on I.R.C. §§ 1311–1314 (the mitigation provisions) and mailed Gill a notice of deficiency for 1948 on September 28, 1959.
- Gill petitioned the Tax Court, arguing that the mitigation provisions required the IRS to act within one year of the 1958 Fifth Circuit opinion (July 18, 1958), making the September 28, 1959 notice late. The Tax Court ruled for the Commissioner, and Gill appealed.

## Issues

1. For purposes of the one-year period in I.R.C. § 1314, did the “determination” occur when the Fifth Circuit filed its 1958 opinion or when the mandate issued, and was the IRS’s September 28, 1959 notice of deficiency timely?
2. Did the requirements for applying the mitigation provisions in I.R.C. §§ 1311–1314 exist so the IRS could adjust the otherwise closed 1948 year to reflect the income shift compelled by the 1958 litigation?

## Decision

- The Fifth Circuit affirmed the Tax Court.
- The court treated the relevant “determination” as occurring when the earlier appellate decision became operative and no longer subject to change in the court of appeals—when the mandate issued (September 29, 1958), not when the opinion was filed (July 18, 1958).
- Measured from the mandate date, the IRS’s September 28, 1959 notice of deficiency fell within the one-year period in § 1314 and was timely.
- The court accepted the Commissioner’s use of §§ 1311–1314 to make a corrective 1948 adjustment after the 1958 decision removed that income from 1949.

## Legal Principles

- I.R.C. §§ 1311–1314 allow limited adjustments to years otherwise barred by limitations when a qualifying “determination” causes an item to be treated inconsistently across tax years and the statute’s conditions for correction are met.
- A qualifying “determination” under I.R.C. § 1313 includes a court decision that has become final for mitigation purposes.
- When the triggering determination is a court of appeals decision, the one-year period in I.R.C. § 1314 is measured from the date the appellate mandate issues (the point at which the appellate disposition takes effect), not from the date the opinion is filed.
- The mitigation provisions may permit the IRS to shift income into a closed year when prior litigation requires that the same income be excluded from an open year, so the income is not omitted from tax entirely.

## Conclusion

In *Gill v. Commissioner*, the Fifth Circuit held that the IRS’s one-year window to act under the mitigation provisions began when the mandate issued in Gill’s prior 1958 case, making the IRS’s September 28, 1959 notice of deficiency for 1948 timely and permitting a mitigation-based adjustment to prevent income excluded from 1949 from escaping taxation.


Gill v. Commissioner, 306 F.2d 902 (1962)