
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1312]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
 Subchapter Q--Readjustment of Tax Between Years and Special Limitations
 
    PART II--MITIGATION OF EFFECT OF LIMITATIONS AND OTHER PROVISIONS
 
Sec. 1312. Circumstances of adjustment

    The circumstances under which the adjustment provided in section 
1311 is authorized are as follows:

           (1) Double inclusion of an item of gross income

        The determination requires the inclusion in gross income of an 
    item which was erroneously included in the gross income of the 
    taxpayer for another taxable year or in the gross income of a 
    related taxpayer.

            (2) Double allowance of a deduction or credit

        The determination allows a deduction or credit which was 
    erroneously allowed to the taxpayer for another taxable year or to a 
    related taxpayer.

           (3) Double exclusion of an item of gross income

        (A) Items included in income

            The determination requires the exclusion from gross income 
        of an item included in a return filed by the taxpayer or with 
        respect to which tax was paid and which was erroneously excluded 
        or omitted from the gross income of the taxpayer for another 
        taxable year, or from the gross income of a related taxpayer; or

        (B) Items not included in income

            The determination requires the exclusion from gross income 
        of an item not included in a return filed by the taxpayer and 
        with respect to which the tax was not paid but which is 
        includible in the gross income of the taxpayer for another 
        taxable year or in the gross income of a related taxpayer.

          (4) Double disallowance of a deduction or credit

        The determination disallows a deduction or credit which should 
    have been allowed to, but was not allowed to, the taxpayer for 
    another taxable year, or to a related taxpayer.

      (5) Correlative deductions and inclusions for trusts or 
                estates and legatees, beneficiaries, or heirs

        The determination allows or disallows any of the additional 
    deductions allowable in computing the taxable income of estates or 
    trusts, or requires or denies any of the inclusions in the 
    computation of taxable income of beneficiaries, heirs, or legatees, 
    specified in subparts A to E, inclusive (secs. 641 and following, 
    relating to estates, trusts, and beneficiaries) of part I of 
    subchapter J of this chapter, or corresponding provisions of prior 
    internal revenue laws, and the correlative inclusion or deduction, 
    as the case may be, has been erroneously excluded, omitted, or 
    included, or disallowed, omitted, or allowed, as the case may be, in 
    respect of the related taxpayer.

     (6) Correlative deductions and credits for certain related 
                                corporations

        The determination allows or disallows a deduction (including a 
    credit) in computing the taxable income (or, as the case may be, net 
    income, normal tax net income, or surtax net income) of a 
    corporation, and a correlative deduction or credit has been 
    erroneously allowed, omitted, or disallowed, as the case may be, in 
    respect of a related taxpayer described in section 1313(c)(7).

     (7) Basis of property after erroneous treatment of a prior 
                                 transaction

        (A) General rule

            The determination determines the basis of property, and in 
        respect of any transaction on which such basis depends, or in 
        respect of any transaction which was erroneously treated as 
        affecting such basis, there occurred, with respect to a taxpayer 
        described in subparagraph (B) of this paragraph, any of the 
        errors described in subparagraph (C) of this paragraph.

        (B) Taxpayers with respect to whom the erroneous treatment 
                occurred

            The taxpayer with respect to whom the erroneous treatment 
        occurred must be--
                (i) the taxpayer with respect to whom the determination 
            is made,
                (ii) a taxpayer who acquired title to the property in 
            the transaction and from whom, mediately or immediately, the 
            taxpayer with respect to whom the determination is made 
            derived title, or
                (iii) a taxpayer who had title to the property at the 
            time of the transaction and from whom, mediately or 
            immediately, the taxpayer with respect to whom the 
            determination is made derived title, if the basis of the 
            property in the hands of the taxpayer with respect to whom 
            the determination is made is determined under section 
            1015(a) (relating to the basis of property acquired by 
            gift).

        (C) Prior erroneous treatment

            With respect to a taxpayer described in subparagraph (B) of 
        this paragraph--
                (i) there was an erroneous inclusion in, or omission 
            from, gross income,
                (ii) there was an erroneous recognition, or 
            nonrecognition, of gain or loss, or
                (iii) there was an erroneous deduction of an item 
            properly chargeable to capital account or an erroneous 
            charge to capital account of an item properly deductible.

(Aug. 16, 1954, ch. 736, 68A Stat. 338; Pub. L. 85-866, title I, 
Sec. 59(a), Sept. 2, 1958, 72 Stat. 1647.)


                               Amendments

    1958--Pars. (6), (7). Pub. L. 85-866 added par. (6) and redesignated 
former par. (6) as (7).


                    Effective Date of 1958 Amendment

    Section 59(c) of Pub. L. 85-866 provided that: ``The amendments made 
by subsections (a) and (b) [amending this section and section 1314 of 
this title] shall apply to determinations (as defined in section 
1313(a)) made after November 14, 1954.''

                  Section Referred to in Other Sections

    This section is referred to in section 1311 of this title.
