§53.1. Recovery of bad debts, prior taxes, and delinquency amounts

           Income attributable to the recovery during the taxable year of a bad debt, prior tax, or delinquency amount, to the extent of the amount of the recovery exclusion with respect to such debt, tax, or amount, shall not be included in gross income and shall be exempt from taxation under this Chapter. For the purposes of this Section:

           (1) The term "Bad debt" means a debt on account of worthlessness or partial worthlessness of which a deduction was allowed for a prior taxable year.

           (2) "Prior tax" means a tax on account of which a deduction or credit was allowed for a prior taxable year.

           (3) "Delinquency amount" means an amount paid or accrued on account of which a deduction or credit was allowed for a prior taxable year and which is attributable to failure to file return with respect to a tax, or pay a tax, within the time required by the law under which the tax is imposed, or to failure to file return with respect to a tax or pay a tax.

           (4) "Recovery exclusion", with respect to a bad debt, prior tax, or delinquency amount, means the amount, determined in accordance with regulations prescribed by the collector, of the deductions or credits allowed, on account of such bad debt, prior tax, or delinquency amount, which did not result in a reduction of the taxpayer's tax under this Chapter or corresponding provisions of prior statutes reduced by the amount excludible in previous taxable years with respect to such debt, tax, or amount under this paragraph.

           Added by Acts 1950, No. 445, §2.