Page 88 - Other Income for Individuals

Recoveries
Recovery and expenses in same year
If the refund or other recovery and the
expense occur in the same year, the
recovery reduces the deduction or credit
and isn’t reported as income.
Recovery for 2 or more years
 If you receive a refund or other recovery that’s for
amounts you paid in 2 or more separate years, you
must allocate, on a pro rata basis, the recovered
amount between the years in which you paid it.
 This allocation is necessary to determine the amount of
recovery from any earlier years and to determine the
amount, if any, of your allowable deduction for this item
for the current year.
 For information on how to figure the allocation, see
Recoveries in Pub. 525.
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