Page:United States Statutes at Large Volume 80 Part 1.djvu/136

 100

PUBLIC LAW 89-384-APR. 8, 1966

[80 STAT.

value of other property received, in respect of such loss, determined as of the date of receipt. " (2) SPECIAL

73 Stat. 125.

RULE

FOR LIFE

INSURANCE

COMPANIES.—The

amount of any recovery of a foreign expropriation loss includes, in the case of a life insurance company, the amount of decrease of any item taken into account under section 810(c), to the extent such decrease is attributable to the release, by reason of such loss, of its liabilities with respect to such item. " (d) ADJUSTMENT FOR PRIOR T A X BENEFITS.—

68A Stat. 33.

26 USC 901-905. 74 Stat. 1010.

.-

"(1) IN GENERAL.—That part of the amount of a recovery of a foreign expropriation loss to which this section applies which, when added to the aggregate of the amounts of previous recoveries with respect to such loss, does not exceed the allowable deductions in prior taxable years on account of such loss shall be excluded from gross income for the taxable year of the recovery for purposes of computing the tax under this subtitle; but there shall be added to, and assessed and collected as a part of, the tax under this subtitle for such taxable year.an amount equal to the total increase in the tax under this subtitle for all taxable years which would result by decreasing, in an amount equal to such part of the recovery so excluded, the deductions allowable in the prior taxable years on.account of such loss. For purposes of this paragraph, if the loss to which the recovery relates was taken into account as a loss from the sale or exchange of a capital asset, the amount of the loss shall be treated,as an allowable deduction even though there were no gains against which to allow such loss. "(2) COMPUTATION.—The mcrease in the tax for each taxable year referred to in paragraph (1) shall be computed in accordance with regulations prescribed by the Secretary or his delegate. Such regulations shall give effect to previous recoveries of any kiud (iucluding recoveries described in section 111, relating to recovery of bad debts, etc.) with respect to any prior taxable year, but shall otherwise treat the tax previously determined for any taxable year in accordance with the principles set forth in section 1314(a) (relating to correction of errors). Subject to the provisions of paragraph (3), all credits allowable against the tax for any taxable year, and all carryovers and carrybacks affected by so decreasing the allowable deductions, shall be taken into account in computing the increase in the tax. "(3) FOREIGN TAXES.—For purposes of this subsection— " (A) any choice made under subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year may be changed, " (B) subject to the provisions of section 904(b), an election to have the limitation provided by section 904(a)(2) apply may be made, and " (C) notwithstanding section 904(b)(1), an election previously made to have the limitation provided by section 904(a)(2) apply may be revoked with respect to any taxable year and succeeding taxable years. " (4) SUBSTITUTION OF CURRENT NORMAL TAX AND SURTAX RATES.—

78 Stat. 25.

For purposes of this subsection, the normal tax rate provided by section 11(b) and the surtax rate provided by section 11(c) which are in effect for the taxable year of the recovery shall be treated as having been in effect for all prior taxable years. "(e) G A I N ON RECOVERY.—That part of the amount of a recovery of a foreign expropriation loss to which this section applies which is not excluded from gross income under subsection (d)(1) shall be considered for the taxable year of the recovery as gain on the involuntary

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