§ 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—
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.