Tax Benefit Rule

Tax Benefit Rule means:
a rule stating that:

1. If a taxpayer recovers an amount that was deducted or credited against tax in a previous year, the recovery must be included in income to the extent that the deduction or credit reduced the tax liability in the earlier year. If no tax benefit was derived from a prior-year deduction or credit, however, the recovery does not have to be included in income. Former IRC (check if this IRC provision is current here) §111.

2. If a taxpayer repays an amount that was previously included in taxable income, the repayment can be deducted in the year in which it is repaid. Former IRC (check if this IRC provision is current here) §111.