Internal Revenue Code · 26 U.S.C.

§ 1312. Circumstances of adjustment

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 1312

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Enacted: September 2, 1958 by Pub. L. 85–866
Length: 7 subsections · 728 words · about 3 min to read
Cross-references: cites 4; cited by 2 Code sections and 4 other regulations
Regulations: 8 issued under this section

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, § 59(a), Sept. 2, 1958, 72 Stat. 1647.)

Regulations under this section

Treasury regulations (26 CFR) issued under § 1312

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 4 other sections

Cited by 2 Code sections

Cited in 4 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

September 2, 1958Enacted by Pub. L. 85–866

Where it sits in the Code

Nearby sections

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Amendments

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

Effective Date of 1958 Amendment

Pub. L. 85–866, title I, § 59(c), Sept. 2, 1958, 72 Stat. 1647, 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.”