Page:United States Statutes at Large Volume 56 Part 1.djvu/947

 77TH CONG. , 2 D SESS.-CH. 619-OCT. 21, 1942 net income of the taxpayer for each year prior to that with respect to which the election is made shall be adjusted for the purposes of this subchapter, including the computation of excess profits net income in each taxable year of the base period under section 711 (b), to conform to such election but for purposes of chapter 1, the tax imposed by this subchapter for any prior taxable year on account of the adjustment required by this subsection shall be considered a part of the tax imposed by this subchapter for the taxable year in which such income is, without regard to this subsection, includible in gross income. Income described in this subsection shall not be considered abnormal income under section 721. "(c) ADJUSTMENT ON ACCOUNT OF CHANGE.- If an adjustment specified in subsection (a) or subsection (b), as the case may be, is, with respect to any taxable year, prevented, on the date of the elec- tion by the taxpayer under subsection (a) or subsection (b), as the case may be, or within two years from such date, by any provision or rule of law (other than this section and other than section 3761, relating to compromises) such adjustment shall nevertheless be made if in respect of the taxable year for which adjustment is sought a notice of deficiency is mailed or a claim for refund is filed, as the case may be, within two years after the date such election is made. If at the time of the mailing of such notice of deficiency or the filing of such claim for refund, the adjustment is so prevented, then the amount of the adjustment authorized by this subsection shall be limited to the increase or decrease in the tax imposed by Chapter 1 and this subchapter previously determined for such taxable year which results solely from the effect of subsection (a), or subsection (b), as the case may be, and such amount shall be assessed and col- lected, or credited or refunded, in the same manner as if it were a deficiency or an overpayment, as the case may be, for such taxable year and as if on the date of such election, two years remain before the expiration of the period of limitation upon assessment or the filing of claim for refund for the taxable year. The tax previously determined shall be ascertained in accordance with section 734 (d). The amount to be assessed and collected under this subsection in the same manner as if it were a deficiency or to be refunded or credited in the same manner as if it were an overpayment, shall not be diminished by any credit or set-off based upon any item, inclusion, deduction, credit, exemption, gain or loss, other than one resulting from the effect of subsection (a) or subsection (b), as the case may be. Such amount, if paid, shall not be recovered by a claim or suit for refund, or suit for erroneous refund based upon any item, inclusion, deduc- tion, credit exemption, gain or loss, other than one resulting from the effect of subsection (a) or subsection (b), as the case may be." (e) RETROACTIVE APPLICATION OF PROVISIONS RELATIVE TO GENERAL RELIEF AND INCOME FROM LONG-TERM CONTRACTS.- (1) The amendments made by this section to section 722 shall be applicable with respect to taxable years beginning after December 31, 1939. (2) Subsection (b) of section 736 and so much of subsection (c) as is applicable thereto shall be applicable only with respect to taxable years beginning after December 31, 1941, except that, if a taxpayer, within six months after the date of enactment of this Act and in accordance with regulations prescribed by the Commissioner with the approval of the Secretary, elects to have such subsections apply retroactively to all taxable years begin- ning after December 31, 1939, such amendments shall also be applicable to such taxable years. 919 54 Stat. 977. 26 U. S. C. §711(b); Supp. I, § 711 (b). Ante, pp. 903,904. 53 Stat. 4. 26U.S.C.§ 1-396; Supp. I, §§ 4-404. Ante, p. 802. 54 Stat. 986. 26 U. S. C., Supp. I, §721. Ante, p. 912. 53 Stat. 462. 26 U. S. C. 3761. 53 Stat. 4. 26U. S. C.§ 1-396; Supp. I, §§ 4-404. Ante p. 802. Poet, p. 922. Ante, p. 914. Ante, p. 918; supra. 56 STAT.]

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