### Question
What does prior understated inclusion mean?


### Answer
**Prior understated inclusion** has the following meaning in *26 U.S.C. § 467*:

> the excess (if any) of—


(A) the amount which would have been taken into account by the lessor under subsection (a) for periods before the disposition if subsection (b)(2) had applied to the agreement, over


(B) the amount taken into account under subsection (a) by the lessor for periods before the disposition

#### Citation:
  - *26 U.S.C. § 467*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart C-Taxable Year for Which Deductions Taken**

