[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6511(d)-1]

[Page 379-380]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Limitations
 
Sec. 301.6511(d)-1  Overpayment of income tax on account of bad debts, 
worthless securities, etc.

    (a)(1) If the claim for credit or refund relates to an overpayment 
of income tax on account of--
    (i) The deductibility by the taxpayer, under section 166 or section 
832(c), of a debt as a debt which became worthless, or, under section 
165(g), of a loss from the worthlessness of a security, or
    (ii) The effect that the deductibility of a debt or loss described 
in subdivision (i) of this subparagraph has on the application to the 
taxpayer of a carryover, then in lieu of the 3-year period from the time 
the return was filed in which claim may be filed or credit or refund 
allowed, as prescribed in section 6511 (a) or (b), the period shall be 7 
years from the date prescribed by law for filing the return (determined 
without regard to any extension of time for filing such return) for the 
taxable year for which the claim is made or the credit or refund allowed 
or made.
    (2) If the claim for credit or refund relates to an overpayment on 
account of the effect that the deductibility of a debt or loss, 
described in subparagraph (1) of this paragraph (a), has on the 
application to the taxpayer of a net operating loss carryback provided 
in section 172(b), the period in which claim for credit or refund may be 
filed shall be whichever of the following two periods expires later:
    (i) Seven years from the last date prescribed for filing the return 
(determined without regard to any extension of time for filing such 
return) for the taxable year of the net operating loss which results in 
such carryback, or
    (ii) The period which ends with the expiration of the period 
prescribed in

[[Page 380]]

section 6511(c) within which a claim for credit or refund may be filed 
with respect to the taxable year of the net operating loss which 
resulted in the carryback.
    (3) In the case of a claim for credit or refund involving items 
described in this section, the amount of the credit or refund may exceed 
the portion of the tax paid within the period provided in section 6511 
(b)(2) or (c), whichever is applicable, to the extent of the amount of 
the overpayment attributable to the deductibility of items described in 
subparagraph (1) of this paragraph (a). If the claim involves an 
overpayment based not only on the deductibility of items described in 
subparagraph (1) of this paragraph (a), but based also on other items, 
the credit or refund cannot exceed the sum of the following:
    (i) The amount of the overpayment which is attributable to the 
deductibility of items described in subparagraph (1) of this paragraph 
(a), and
    (ii) The balance of such overpayment up to a limit of the portion, 
if any, of the tax paid within the period provided in section 6511 
(b)(2) or (c), or within the period provided in any other applicable 
provision of law.
    (4) If the claim involves an overpayment based not only on the 
deductibility of items described in subparagraph (1) of this paragraph 
(a), but based also on other items, and if the claim with respect to any 
items is barred by the expiration of any applicable period of 
limitation, the portion of the overpayment attributable to the items not 
so barred shall be determined by treating the allowance of such items as 
the first adjustment to be made in computing such overpayment.
    (b) If a claim for credit or refund is not filed within the 
applicable period described in paragraph (a) of this section, then 
credit or refund may be allowed or made only if claim therefor is filed 
or if such credit or refund is allowed within any period prescribed in 
section 6511 (a), (b), or (c), whichever is applicable, subject to the 
provisions thereof limiting the amount of credit or refund in the case 
of a claim filed, or, if no claim was filed, in the case of credit or 
refund allowed within such applicable period as prescribed in section 
6511 (b) or (c).
    (c) The provisions of this section and section 6511(d)(1) do not 
apply to an overpayment resulting from the deductibility of a debt that 
became partially worthless during the taxable year, but only to an 
overpayment resulting from the deductibility of a debt which became 
entirely worthless during such year.
    (d) The provisions of paragraph (a) of this section with regard to 
an overpayment caused by the deductibility of a bad debt under section 
166 or section 832(c), or of a loss from the worthlessness of a security 
under section 165(g), are likewise applicable to an overpayment caused 
by the effect that the deductibility of such bad debt or loss has on the 
application to the taxpayer of a carryover or of a carryback.