MITIGATION OF EFFECT OF PRICE REDETERMINATIONS OF SUBCONTRACTS SUBJECT TO RENEGOTIATION.

SEC. 62. MITIGATION OF EFFECT OF PRICE REDETERMINATIONS OF SUBCONTRACTS SUBJECT TO RENEGOTIATION. (a) Readjustment of Tax for Prior Years.—Subchapter B of chapter 4 (relating to mitigation of effect of renegotiation of Government contracts) is amended by adding at the end thereof the following new section: “SEC. 1482. READJUSTMENT FOR REPAYMENTS MADE PURSUANT TO PRICE REDETERMINATIONS. “(a) General Rule.— If, pursuant to a price redetermination provision in a subcontract to which this section applies, a repayment with respect to an amount paid under the subcontract is made by one party to the subcontract (hereinafter referred to as the ‘payor’) to another party to the subcontract (hereinafter referred to as the ‘payee’), then— “(1) the tax of the payor for prior taxable years shall be recomputed as if the amount received or accrued by him with respect to which the repayment is made did not include an amount equal to the amount of the repayment, and “(2) the tax of the payee for prior taxable years shall be recomputed as if the amount paid or incurred by him with respect to which the repayment is made did not include an amount equal to the amount of the repayment. “(b) Subcontracts to Which Section Applies.—Subsection (a) shall apply only to a subcontract which is subject to renegotiation under the applicable Federal renegotiation act. “(c) Limitation.—Subsection (a) shall not apply to any repayment to the extent that section 1481 applies to the amount repaid. “(d) Treatment in Year of Repayment.—The amount of any repayment to which subsection (a) applies shall not be taken into account by the payor or payee for the taxable year in which the repayment is made; but any overpayment or underpayment of tax resulting from the application of subsection (a) shall be treated as if it were an overpayment or underpayment for the taxable year in which the repayment is made.” (b) Table of Contents.—The table of sections for such subchapter is amended by adding at the end thereof the following: “Sec. 1482. Readjustment for repayments made pursuant to price redeterminations.” (c) Effective Date.—The amendments made by subsections (a) and (b) shall apply only with respect to subcontracts entered into after December 31, 1957.