(1) The amount of the net operating loss or unused investment credit;

(2) The amount of the tax previously determined for the prior taxable year affected by such carryback, the tax previously determined being ascertained in accordance with the method prescribed in section 1314(a);

(3) The amount of decrease in such tax, attributable to such carryback, such decrease being determined by applying the carryback in the manner provided by law to the items on the basis of which such tax was determined;

(4) The unpaid amount of such tax, not including any amount required to be shown under paragraph (5);

(5) The amount, with respect to the tax for the taxable year immediately preceding the taxable year [of such loss from which the carryback is made, as to which an extension of time for payment under section 6164 is in effect; and

(6) Such other information for purposes of carrying out the provisions of this section as may be required by such regulations An application under this subsection shall not constitute a claim for credit or refund.

(b) ALLOWANCE OF ADJUSTMENTS.-Within a period of 90 days from the date on which an application for a tentative carryback adjustment is filed under subsection (a), for from the last day of the month in which falls the last date prescribed by law (including any extension of time granted the taxpayer) for filing the return for the taxable year of the net operating loss or unused investment credit from which such carryback results, whichever is the later, the Secretary or his delegate shall make, to the extent he deems practicable in such period, a limited examination of the application, to discover omissions and errors of computation therein, and shall determine the amount of the decrease in the tax attributable to such carryback upon the basis of the application and the examination, except that the Secretary or his delegate may disallow, without further action, any application which he finds contains errors of computation which he deems cannot be corrected by him within such 90-day period or material omissions. Such decrease shall be applied against any unpaid amount of the tax decreased (including any amount of such tax as to which an extension of time under section 6164 is in effect) and any remainder shall be credited against any unsatisfied amount of any tax for the taxable year immediately preceding the taxable year of the net operating loss or unused investment credit the time for payment of which tax is extended under section 6164. Any remainder shall, within such 90-day period, be either credited against any tax or installment thereof then due from the taxpayer, or refunded to the taxpayer.

(c) CONSOLIDATED RETURNS.-If the corporation seeking a tentative carryback adjustment under this section, made or was required to make a consolidated return, either for the taxable year within which the net operating loss or unused investment credit arises, or for the preceding taxable year affected by such loss or credit, the provisions of this section shall apply only to such extent and subject to such conditions, limitations, and exceptions as the Secretary or his delegate may by regulations prescribe.

SEC. 6501. LIMITATIONS ON ASSESSMENT AND COLLECTION.

(a) GENERAL RULE.-Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.

(h) NET OPERATING LOSS CARRYBACKS.-In the case of a deficiency attributable to the application to the taxpayer of a net operating loss carry back (including deficiencies which may be assessed pursuant to the provisions of section 6213(b) (2)), such deficiency may be assessed at any time before the expiration of the period within which a deficiency for the taxable year of the net operating loss which results in such carryback may be assessed, or within 18 months after the date on which the taxpayer files in accordance with section 172(b) (3) a copy of the certification (with respect to such taxable year) issued under section 317 of the Trade Expansion Act of 1962, whichever is later.

*

(i) INVESTMENT CREDIT CARRYBACKS.-In the case of a deficiency attributable to the application to the taxpayer of an investment credit carry back (including deficiencies which may be assessed pursuant to the provisions of section 6213(b) (2)), such deficiency may be assessed at any time before the expiration of the period within which a deficiency for the taxable year of the unused investment credit which results in such carryback may be assessed.

(m) TENTATIVE CARRYBACK ADJUSTMENT ASSESSMENT PERIOD.In a case where an amount has been applied, credited, or refunded under section 6411 (relating to tentative carryback adjustments) by reason of a net operating loss carryback or an investment credit carryback to a prior taxable year, the period described in subsection (a) of this section for assessing a deficiency for such prior taxable year shall be extended to include the period described in subsection (h) or (j whichever is applicable; except that the amount which may be assessed solely by reason of this subsection shall not exceed the amount so applied. credited, or refunded under section 6411, reduced by any amount which may be assessed solely by reason of subsection (h) or (j), as the case may be.

SEC. 6611. INTEREST ON OVERPAYMENTS.

[Sec. 6611(a)]

(a) RATE. Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax at the rate of 6 percent

(e) INCOME TAX REFUND WITHIN 45 DAYS [OF DUE DATE OF TAX] AFTER RETURN IS FILED.-If any overpayment of tax imposed y subtitle A is refunded within 45 days after the last date prescribed or filing the return of such tax (determined without regard to any Extension of time for filing the return) or, in case the return is filed fter such last date, is refunded within 45 days after the date the return 8 filed, no interest shall be allowed under subsection (a) on such Overpayment.

OCTOBER 11, 1966.—-Ordered to be printed

Filed under authority of the order of the Senate of October 11, 1966

Mr. LONG of Louisiana, from the Committee on Finance, submitted the following

REPORT

[To accompany H.R. 11782]

The Committee on Finance, to which was referred the bill (H.R. 11782) to amend the Internal Revenue Code of 1954 to allow a deduction for additions to a reserve for certain guaranteed debt obligations, and for other purposes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass.

I. SUMMARY

This bill provides that a taxpayer who is a dealer in property may take an income tax deduction for reasonable additions to a reserve for bad debts which arise from his contingent liability as a guarantor, endorser, or indemnitor of debt obligations arising out of the sale by him of real property or tangible personal property (including related services) in the ordinary course of the dealer's business. The bill also provides that this is to be the only deduction allowable for additions to a reserve for bad debts for obligations of this type.

The bill contains special features designed to prevent a doubling up of deductions during the transition period. The bill also provides that for taxable years beginning before August 2, 1966, a taxpayer may establish a reserve under this new provision without obtaining permission of the Commissioner of Internal Revenue to change his method of accounting.

The new provision applies generally to taxable years ending after October 21, 1965. However, in the case of years ending before October 22, 1965, where the taxpayer claimed a deduction (under the provisions of existing law which relate to reserve for bad debts) the claimed deduction is to be allowed for past years if it would be allowable under the new provision.

The passage of this bill is favored by the Treasury Department.