CARRYBACK AND CARRYOVER OF FOREIGN TAX CREDIT.

SEC. 42. CARRYBACK AND CARRYOVER OF FOREIGN TAX CREDIT. (a) Allowance.—Section 904 (relating to limitation on foreign tax credit) is amended by adding at the end thereof the following new subsection: “(c) Carryback and Carryover of Excess Tax Paid.—Any amount by which any such tax paid or accrued to any foreign country or possession of the United States for any taxable year beginning after December 31, 1957, for which the taxpayer chooses to have the benefits of this subpart exceeds the limitation under subsection (a) shall be deemed tax paid or accrued to such foreign country or possession of the United States in the second preceding taxable year, in the first preceding taxable year, and in the first, second, third, fourth, or fifth succeeding taxable years, in that order and to the extent not deemed tax paid or accrued in a prior taxable year, in the amount by which the limitation under subsection (a) for such preceding or succeeding taxable year exceeds the sum of the tax paid or accrued to such foreign country or possession for such preceding or succeeding taxable year and the amount of the tax for any taxable year earlier than the current taxable year which shall be deemed to have been paid or accrued in such preceding or subsequent taxable year (whether or not the taxpayer chooses to have the benefits of this subpart with respect to such 72 Stat. 1640 earlier taxable year). Such amount deemed paid or accrued in any year may be availed of only as a tax credit and not as a deduction and only if taxpayer for such year chooses to have the benefits of this subpart as to taxes paid or accrued for that year to foreign countries or possessions. For purposes of this subsection, the terms ‘second preceding taxable year’ and ‘first preceding taxable year’ do not include any taxable year beginning before January 1, 1958.”. (b) Interest on Overpayments.—Section 6611 (relating to interest on overpayments) is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: “(g) Refund of Income Tax Caused by Carryback of Foreign Taxes.—For purposes of subsection (a), if any overpayment of tax results from a carryback of tax paid or accrued to foreign countries or possessions of the United States, such overpayment shall be deemed not to have been paid or accrued prior to the close of the taxable year under this subtitle in which such taxes were in fact paid or accrued.”. (c) Effective Date.—The amendments made by subsections (a) and (b) shall apply only with respect to taxable years beginning after December 31, 1957.