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TITLE 26-INTERNAL REVENUE CODE (B) the increase in taxable income for the year of the change which results solely by reason of the adjustments required by sub- section (a)(2) exceeds $3,000, then the tax under this chapter attributable to such increase in taxable income shall not be greater than the aggregate increase in the taxes under this chapter (or under the corre- sponding provisions of prior revenue laws) which would result if one-third of such in- crease in taxable income were included in tax- able income for the year of the change and one-third of such increase were included for each of the 2 preceding taxable years. (2) Allocation under new method of accounting If- (A) the increase in taxable income for the year of the change which results solely by reason of the adjustments required by sub- section (a)(2) exceeds $3,000, and (B) the taxpayer establishes his taxable income (under the new method of account- ing) for one or more taxable years consecu- tively preceding the taxable year of the change for which the taxpayer in comput- ing taxable income used the method of ac- counting from which the change is made, then the tax under this chapter attributable to such increase in taxable income shall not be greater than the net increase in the taxes under this chapter (or under the correspond- ing provisions of prior revenue laws) which would result if the adjustments required by subsection (a)(2) were allocated to the taxable year or years specified in subparagraph (B) to v hich they are properly allocable under the new method of accounting and the balance of the adjustments required by subsection (a)(2) was allocated to the taxable year of the change. (3) Special rules for computations under para- graphs (1) and (2) For purposes of this subsection- (A) There shall be taken into account the increase or decrease in tax for any taxable year preceding the year of the change to which no adjustment Is allocated under paragraph (1) or (2) but which is affected by a net operating loss (as defined In sec- tion 172) or by a capital loss carryback or carryover (as defined in section 1212), deter- mined with reference to taxable years with respect to which adjustments under para- graph (1) or (2) are allocated. (B) The increase or decrease in the tax for any taxable year for which an assess- ment of any deficiency, or a credit or refund of any overpayment, is prevented ry any law or rule of law, shall be determtted by reference to the tax previously deter- mined (within the meaning of section 1314(a)) for such year. (C) In applying section 7807(b)(1), the provisions of chapter 1 (other than sub- chapter E, relating to self-employment income) and chapter 2 of the Internal Rev- enue Code of 1939 shall be treated as the corresponding provisions of the Internal Revenue Code of 1939. (c) Adjustments under regulations In the case of any change described in subsec- tion (a), the taxpayer may, in such manner and subject to such conditions as the Secretary may by regulations prescribe, take the adjustments required by subsection (a)(2) into account In computing the tax imposed by this chapter for the taxable year or years permitted under such regulations. (d) Exception for change to installment basis This section shall not apply to a change to which section 453 (relating to change to install- ment method) applies. (Aug. 16, 1954, ch. 736, 68A Stat. 160; Sept. 2, 1958, Pub. L. 85-866, title I, § 29(a), (b), 72 Stat. 1626-1628; Dec. 30, 1969, Pub. L. 91-172, title V, § 512(f)(4), 83 Stat. 641; Oct. 4, 1976, Pub. L. 94- 455, title XIX, §§ 1901(a)(70), 1906(b)(13)(A), 90 Stat. 1776, 1834.) REFERENcEs IN TEXT The Internal Revenue Code of 1939, referred to In subsec. (b)(3)(C), is act Feb. 10, 1939, ch. 2, 53 Stat. 1, as amended. Prior to the enactment of the Internal Revenue Code of 1954, the 1939 Code was classified to former Title 26, Internal Revenue Code. Chapters 1 and 2 of the Internal Revenue Code of 1939 were com- prised of sections 1 to 482 and 500 to 784, respectively, of former title 26. Chapters 1 (except sections 143 and 144) and 2 were repealed by section 7851(a)(1) of this title. For table of comparisons of the 1939 Code to the 1954 Code, see Table I preceding section 1 of this title. See, also, section 7851(e) of this title for provision that references in the 1954 Code to a provision of the 1939 Code, not then applicable, shall be deemed a reference to the corresponding provision of the 1954 Code, which is then applicable. AMENDMENTS 1976-Subsecs. (b)(1), (2). Pub, L. 94-455, § 1901(a)(70)(B), struck out ", other than the amount of such adjustments to which paragraph (4) or (5) ap- plies," following "required by subsection (a)(2)". Subsec. (b)(4), (5), (6). Pub. L. 94-455, § 1901(a)(70)(A), struck out subsec. (b)(4) which relat- ed to special rule for pre-1954 general adjustments, subsec. (b)(5) which related to special rule for pre-1954 adjustments in case of certain decedents, and subsec. (b)(6) which related to the application of the special rule for pre-1954 general adjustments. Subsec. (c). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". 1969-Subsec. (b)(3)(A). Pub. L. 91-172 substituted "loss carryback or carryover" for "loss carryover". 1958-Subsec. (a)(2). Pub. L. 85-866, § 29(a)(1), added "unless the adjustment is attributable to a change in the method of accounting initiated by the taxpayer", following "does not apply". Subsec. (b)(1). Pub. L. 85-866, § 29(b)(1)-(3), inserted after "subsection (a)(2)" the words ", other than the amount of such adjustments to which paragraph (4) or (5) applies," and substituted "the aggregate in- crease in the taxes" for "the aggregate of the taxes" and "which would result if one-third of such increase in taxable income" for "which would result if one- third of such increase". Subsec. (b)(2). Pub. L. 85-866, § 29(b)(1), (4), inserted after "subsection (a)(2)", wherever appearing "other than the amount of such adjustments to which para- graph (4) or (5) applies," and "(or under the corre- sponding provisions of prior revenue laws)" after "the net increase in the taxes under this Chapter". Subsec. (b)(3)(A). Pub. L. 85-866, § 29(b)(5), substi- tuted "paragraph (1) or (2)" for "paragraph (2)", wherever appearing. Subsecs. (b)(4) to (6). Pub. L. 85-866, § 29(a)(2), added subsec. (b)(4) to (6). Page 372