26 U.S.C. § 111 | Recovery of tax benefit items

(a)

Deductions

Gross income does not include income attributable to the recovery during the taxable year of any amount deducted in any prior taxable year to the extent such amount did not reduce the amount of tax imposed by this chapter.

(b)

Credits

(1)

In general

If—

(A)

a credit was allowable with respect to any amount for any prior taxable year, and

(B)

during the taxable year there is a downward price adjustment or similar adjustment,

the tax imposed by this chapter for the taxable year shall be increased by the amount of the credit attributable to the adjustment.

(2)

Exception where credit did not reduce tax

Paragraph (1) shall not apply to the extent that the credit allowable for the recovered amount did not reduce the amount of tax imposed by this chapter.

(3)

Exception for investment tax credit and foreign tax credit

This subsection shall not apply with respect to the credit determined under section 46 and the foreign tax credit.

(c)

Treatment of carryovers

For purposes of this section, an increase in a carryover which has not expired before the beginning of the taxable year in which the recovery or adjustment takes place shall be treated as reducing tax imposed by this chapter.

(d)

Special rules for accumulated earnings tax and for personal holding company tax

In applying subsection (a) for the purpose of determining the accumulated earnings tax under section 531 or the tax under section 541 (relating to personal holding companies)—

(1)

any excluded amount under subsection (a) allowed for the purposes of this subtitle (other than section 531 or section 541) shall be allowed whether or not such amount resulted in a reduction of the tax under section 531 or the tax under section 541 for the prior taxable year; and

(2)

where any excluded amount under subsection (a) was not allowable as a deduction for the prior taxable year for purposes of this subtitle other than of section 531 or section 541 but was allowable for the same taxable year under section 531 or section 541, then such excluded amount shall be allowable if it did not result in a reduction of the tax under section 531 or the tax under section 541.

Aug. 16, 1954, ch. 736 68A Stat. 33 Pub. L. 94–455, title XIX, § 1906(b)(13)(A)Oct. 4, 197690 Stat. 1834 Pub. L. 96–589, § 2(c)Dec. 24, 198094 Stat. 3396 Pub. L. 98–369, div. A, title I, § 171(a)July 18, 198498 Stat. 698 Pub. L. 99–514, title XVIII, § 1812(a)(1)Oct. 22, 1986100 Stat. 2833(, ; , , ; , , ; , , ; , (2), , .)

Editorial Notes

Amendments

Pub. L. 99–514, § 1812(a)(1)1986—Subsec. (a). , substituted “did not reduce the amount of tax imposed by this chapter” for “did not reduce income subject to tax”.

Pub. L. 99–514, § 1812(a)(2)Subsec. (c). , substituted “reducing tax imposed by this chapter” for “reducing income subject to tax or reducing tax imposed by this chapter, as the case may be”.

Pub. L. 98–3691984— amended section generally, substituting provisions relating to recovery of tax benefit items for provisions relating to recovery of bad debts, prior taxes, and delinquency amounts.

Pub. L. 96–5891980—Subsec. (d). added subsec. (d).

Pub. L. 94–4551976—Subsec. (b)(4). struck out “or his delegate” after “Secretary”.

Statutory Notes and Related Subsidiaries

Effective Date of 1986 Amendment

Pub. L. 99–514 Pub. L. 98–369, div. A section 1881 of Pub. L. 99–514 section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date of 1984 Amendment

Pub. L. 98–369, div. A, title I, § 171(c)July 18, 198498 Stat. 699

December 31, 1983“The amendments made by this section [amending this section] shall apply to amounts recovered after , in taxable years ending after such date.”

, , , provided that:

Effective Date of 1980 Amendment

Pub. L. 96–589Dec. 31, 1980Dec. 31, 1980Sept. 30, 1979Pub. L. 96–589 section 108 of this titleAmendment by applicable to transactions which occur after , other than transactions which occur in a proceeding in a bankruptcy case or similar judicial proceeding or in a proceeding under Title 11 commencing on or after , with an exception permitting the debtor to make the amendment applicable to transactions occurring after , in a specified manner, see section 7(a)(1), (f) of , set out as a note under .

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514Jan. 1, 1989section 1140 of Pub. L. 99–514 section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .