
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1314]

 
                     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. 1314. Amount and method of adjustment


(a) Ascertainment of amount of adjustment

    In computing the amount of an adjustment under this part there shall 
first be ascertained the tax previously determined for the taxable year 
with respect to which the error was made. The amount of the tax 
previously determined shall be the excess of--
        (1) the sum of--
            (A) the amount shown as the tax by the taxpayer on his 
        return (determined as provided in section 6211(b)(1), (3), and 
        (4), relating to the definition of deficiency), if a return was 
        made by the taxpayer and an amount was shown as the tax by the 
        taxpayer thereon, plus
            (B) the amounts previously assessed (or collected without 
        assessment) as a deficiency, over--

        (2) the amount of rebates, as defined in section 6211(b)(2), 
    made.

There shall then be ascertained the increase or decrease in tax 
previously determined which results solely from the correct treatment of 
the item which was the subject of the error (with due regard given to 
the effect of the item in the computation of gross income, taxable 
income, and other matters under this subtitle). A similar computation 
shall be made for any other taxable year affected, or treated as 
affected, by a net operating loss deduction (as defined in section 172) 
or by a capital loss carryback or carryover (as defined in section 
1212), determined with reference to the taxable year with respect to 
which the error was made. The amount so ascertained (together with any 
amounts wrongfully collected as additions to the tax or interest, as a 
result of such error) for each taxable year shall be the amount of the 
adjustment for that taxable year.

(b) Method of adjustment

    The adjustment authorized in section 1311(a) shall be made by 
assessing and collecting, or refunding or crediting, the amount thereof 
in the same manner as if it were a deficiency determined by the 
Secretary with respect to the taxpayer as to whom the error was made or 
an overpayment claimed by such taxpayer, as the case may be, for the 
taxable year or years with respect to which an amount is ascertained 
under subsection (a), and as if on the date of the determination one 
year remained before the expiration of the periods of limitation upon 
assessment or filing claim for refund for such taxable year or years. 
If, as a result of a determination described in section 1313(a)(4), an 
adjustment has been made by the assessment and collection of a 
deficiency or the refund or credit of an overpayment, and subsequently 
such determination is altered or revoked, the amount of the adjustment 
ascertained under subsection (a) of this section shall be redetermined 
on the basis of such alteration or revocation and any overpayment or 
deficiency resulting from such redetermination shall be refunded or 
credited, or assessed and collected, as the case may be, as an 
adjustment under this part. In the case of an adjustment resulting from 
an increase or decrease in a net operating loss or net capital loss 
which is carried back to the year of adjustment, interest shall not be 
collected or paid for any period prior to the close of the taxable year 
in which the net operating loss or net capital loss arises.

(c) Adjustment unaffected by other items

    The amount to be assessed and collected in the same manner as a 
deficiency, or to be refunded or credited in the same manner as an 
overpayment, under this part, shall not be diminished by any credit or 
set-off based upon any item other than the one which was the subject of 
the adjustment. The amount of the adjustment under this part, if paid, 
shall not be recovered by a claim or suit for refund or suit for 
erroneous refund based upon any item other than the one which was the 
subject of the adjustment.

(d) Periods for which adjustments may be made

    No adjustment shall be made under this part in respect of any 
taxable year beginning prior to January 1, 1932.

(e) Taxes imposed by subtitle C

    This part shall not apply to any tax imposed by subtitle C (sec. 
3101 and following relating to employment taxes).

(Aug. 16, 1954, ch. 736, 68A Stat. 340; Pub. L. 85-866, title I, 
Sec. 59(b), Sept. 2, 1958, 72 Stat. 1647; Pub. L. 89-44, title VIII, 
Sec. 809(d)(5)(B), June 21, 1965, 79 Stat. 168; Pub. L. 91-172, title V, 
Sec. 512(f)(7), (8), Dec. 30, 1969, 83 Stat. 641, 642; Pub. L. 94-455, 
title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)


                               Amendments

    1976--Subsec. (b). Pub. L. 94-455 struck out ``or his delegate'' 
after ``Secretary''.
    1969--Subsec. (a). Pub. L. 91-172, Sec. 512(f)(7), substituted 
``capital loss carryback or carryover'' for ``capital loss carryover''.
    Subsec. (b). Pub. L. 91-172, Sec. 512(f)(8), inserted reference to 
net capital loss.
    1965--Subsec. (a)(1)(A). Pub. L. 89-44 struck out ``(b)(1) and (3)'' 
and inserted in lieu thereof ``(b)(1), (3), and (4)''.
    1958--Subsec. (c). Pub. L. 85-866 substituted in second sentence 
``The'' for ``Other than in the case of an adjustment resulting from a 
determination under section 1313(a)(4), the''.


                    Effective Date of 1969 Amendment

    Amendment by Pub. L. 91-172 applicable with respect to net capital 
losses sustained in taxable years beginning after Dec. 31, 1969, see 
section 512(g) of Pub. L. 91-172, set out as a note under section 1212 
of this title.


                    Effective Date of 1965 Amendment

    Amendment by Pub. L. 89-44 applicable to taxable years beginning on 
or after July 1, 1965, see section 809(f) of Pub. L. 89-44, set out as a 
note under section 6420 of this title.


                    Effective Date of 1958 Amendment

    Amendment by Pub. L. 85-866 effective with respect to determinations 
made after Nov. 14, 1954, see section 59(c) of Pub. L. 85-866, set out 
as a note under section 1312 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 481, 1311, 1333, 1351, 6164, 
6411 of this title.
