[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 445-446]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6411-2  Computation of tentative carryback adjustment.

    (a) Tax previously determined. The taxpayer is to determine the 
amount of decrease, attributable to the carryback, in tax previously 
determined for each taxable year before the taxable year of the net 
operating loss, net capital loss, unused investment credit, or unused 
WIN credit. The tax previously determined is to be ascertained in 
accordance with the method prescribed in section 1314(a). Thus, the tax 
previously determined will be the tax shown on the return as filed, 
increased by any amounts assessed (or collected without assessment) as 
deficiencies before the date of the filing of the application for a 
tentative carryback adjustment, and decreased by any amounts abated, 
credited, refunded, or otherwise repaid prior to such date. Any items as 
to which the Internal Revenue Service and the taxpayer are in 
disagreement at the time of the filing of the application shall be taken 
into account in ascertaining the tax previously determined only if, and 
to the extent that,

[[Page 446]]

they were reported in the return, or were reflected in any amounts 
assessed (or collected without assessment) as deficiencies, or in any 
amounts abated, credited, refunded, or otherwise repaid, before the date 
of filing the application. The tax previously determined, therefore, 
will reflect the foreign tax credit and the credit for tax withheld at 
source provided in section 32.
    (b) Decrease attributable to carryback. The decrease in tax 
previously determined which is affected by the carryback or any related 
adjustments, is to be determined, except for such carryback and related 
adjustments, on the basis of the items which entered into the 
computation of such tax as previously determined; the tax previously 
determined being ascertained in the manner described in this section. In 
determining any such decrease, items shall be taken into account only to 
the extent that they were reported in the return, or were reflected in 
amounts assessed (or collected without assessment) as deficiencies, or 
in amounts abated, credited, refunded, or otherwise repaid, before the 
date of filing the application for a tentative carryback adjustment. If 
the Internal Revenue Service and the taxpayer are in disagreement as to 
the proper treatment of any item, it shall be assumed for purposes of 
determining the decrease in the tax previously determined that such item 
was correctly reported by the taxpayer unless, and to the extent that, 
the disagreement has resulted in the assessment of a deficiency (or the 
collection of an amount without an assessment), or the allowing or 
making of an abatement, credit, refund, or other repayment, before the 
date of filing the application. Thus, if the taxpayer claimed a 
deduction on its return of $50,000 for salaries paid its officers but 
the district director asserts that such deduction should not exceed 
$20,000, and the Internal Revenue Service and the taxpayer have not 
agreed on the amount properly deductible before the date the application 
for a tentative carryback adjustment is filed, $50,000 shall be 
considered as the amount properly deductible for purposes of determining 
the decrease in tax previously determined in respect of the application 
for a tentative carryback adjustment. In determining the decrease in tax 
previously determined, any items which are affected by the carryback 
must be adjusted to reflect such carryback. Thus, unless otherwise 
provided, any deduction limited, for example, by adjusted gross income, 
such as the deduction for medical, dental, etc., expenses is to be 
recomputed on the basis of the adjusted gross income as affected by the 
carryback.

[T.D. 6500, 25 FR 12144, Nov. 26, 1960, as amended by T.D. 7301, 39 FR 
973, Jan. 4, 1974]