Treatment of amounts allowed under section 1211(b)(1) or (2)

(A) In general For purposes of determining the excess referred to in subparagraph (A) or (B) of paragraph (1), there shall be treated as a short-term capital gain in the taxable year an amount equal to the lesser of— (i) the amount allowed for the taxable year under paragraph (1) or (2) of section 1211(b), or (ii) the adjusted taxable income for such taxable year.

(B) Adjusted taxable income For purposes of subparagraph (A), the term “adjusted taxable income” means taxable income increased by the sum of— (i) the amount allowed for the taxable year under paragraph (1) or (2) of section 1211(b), and (ii) the deduction allowed for such year under section 151 or any deduction in lieu thereof. For purposes of the preceding sentence, any excess of the deductions allowed for the taxable year over the gross income for such year shall be taken into account as negative taxable income.