26 U.S.C. § 80 — Restoration of value of certain securities

(a) This applies to a U.S. corporation that pays regular corporate tax. Say the company owned a "security" (as defined elsewhere in the tax code) that became worthless because a foreign government, or one of its subdivisions or agencies, seized or took over property connected to that security. If the company already claimed that loss — either as a capital-asset loss or as a deduction — and later gets some or all of that value back in some tax year, because it recovered money or property connected to the original property, then the recovered value must be included as income for the year it comes back. This only applies up to the amount of the original loss (adding in any amounts already restored and taxed in earlier years), and only except as reduced under subsection (b). (b) The amount that would otherwise be taxed under subsection (a) is reduced by whatever part of the original loss never actually lowered the company's taxes in any year — figured under rules the Secretary of the Treasury sets. (c) For tax purposes: (1) the recovered amount counted as income under this section is normally treated as ordinary income; but (2) if the original loss had been treated as a loss from selling a capital asset, then the recovered amount is instead treated as a long-term capital gain. (d) This section does not apply to a recovery that is instead covered by the separate foreign-expropriation-loss-recovery rule in section 1351.