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TITLE 26-INTERNAL REVENUE CODE earnings tax imposed by section 531 or the tax on personal holding companies imposed by section 541) or corresponding provisions of prior income tax laws (other than subchapter E of chapter 2 of the Internal Revenue Code of 1939, relating to World War II excess prof- its tax), reduced by the amount excludable in previous taxable years with respect to such debt, tax, or amount under this section. (c) Special rules for accumulated earnings tax and for personal holding company tax In applying subsections (a) and (b) for the purpose of determining the accumulated earn- ings tax under section 531 or the tax under sec- tion 541 (relating to personal holding compa- nies)- (1) a recovery exclusion allowed for pur- poses of this subtitle (other than section 531 or section 541) shall be allowed whether or not the bad debt, prior tax, or delinquency amount resulted in a reduction of the tax under section 531 or the tax under section 541 for the prior taxable year; and (2) where a bad debt, prior tax, or delin- quency amount was not allowable as a deduc- tion or credit for the prior taxable year for purposes of this subtitle other than of section 531 or section 541 but was allowable for the same taxable year under section 531 or sec- tion 541, then a recovery exclusion shall be al- lowable if such bad debt, prior tax, or delin- quency amount did not result in a reduction of the tax under section 531 or the tax under section 541. (Aug. 16, 1954, ch. 736, 68A Stat. 33; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834.) REFERENCES IN TEXT Subchapter E of chapter 2 of the Internal Revenue Code of 1939, referred to in subsec. (b)(4), was com- prised of sections 710 to 736 of former Title 26, Inter. nal Revenue Code, and was repealed by act Nov. 8, 1945, ch. 453, title I, § 122(a), 59 Stat. 568. AMENDMENT 1976-Subsec. (b)(4). Pub. L. 94-455 struck out "or his delegate" following "Secretary". CRoss REFERENCES Additions to the tax and additional amounts- Failure to file tax return or to pay tax, see section 6651 of this title. Failure to pay tax, see section 6653 of this title. Penalties for willful failure to- File return, or pay tax, see section 7203 of this title. Pay over tax, see section 7202 of this title. Recovery of bad debts, prior taxes, or delinquency amounts as item of distributor or transferor corpora- tion with respect to carryovers in certain corporate ac- quisitions, see section 381 of this title. Rules and regulations, see section 7805 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 381, 1351 of this title. § 112. Certain combat pay of members of the Armed Forces (a) Enlisted personnel Gross income does not include compensation received for active service as a member below the grade of commissioned officer in the Armed Forces of the United States for any month during any part of which such member- (1) served in a combat zone, or (2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone. With respect to service in the combat zone des- ignated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978. (b) Commissioned officers Gross income does not include so much of the compensation as does not exceed $500 received for active service as a commissioned officer in the Armed Forces of the United States for any month during any part of which such officer- (1) served in a combat zone, or (2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone. With respect to service in the combat zone des- ignated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978. (c) Definitions For purposes of this section- (1) The term "commissioned officer" does not include a commissioned warrant officer. (2) The term "combat zone" means any area which the President of the United States by Executive Order designates, for purposes of this section or corresponding provisions of prior income tax laws, as an area in which Armed Forces of the United States are or have (after June 24, 1950) engaged in combat. (3) Service is performed in a combat zone only if performed on or after the date desig- nated by the President by Executive Order as the date of the commencing of combatant ac- tivities in such zone, and on or before the date designated by the President by Execu- tive Order as the date of the termination of combatant activities in such zone; except that June 25, 1950, shall be considered the date of the commencing of combatant activities in the combat zone designated in Executive Order 10195. (4) The term "compensation" does not in- clude pensions and retirement pay. (d) Prisoners of war, etc. (1) Members of the Armed Forces Gross income does not include compensa- tion received for active service as a member of the Armed Forces of the United States for any month during any part of which such member is in a missing status (as defined in section 551(2) of title 37, United States Code) during the Vietnam conflict as a result of such conflict, other than a period with re- spect to which it is officially determined under section 552(c) of such title 37 that he is officially absent from his post of duty with- out authority. Page 121 §n12