A territory is “liberated” when it is retaken from an occupying enemy by an ally of the country it initially belonged to. In this case, the territory reverts to the control of the country that originally owned it at the start of the game, NOT the country that actually took back the territory. As an example, Germany takes the UK-owned territory of French West Africa w/ 1 INF. USA destroys this force on their turn & retakes the territory w/ 1 INF. Now UK–NOT USA–gets the income from this territory, because UK originally owned it. If USA had taken Algeria from Germany instead w/ 1 INF, USA could put his/her marker on it & start collecting income from it–that is NOT “liberation” but straight conquest.
Now if Germany were then to retake Algeria, then UK attacked in turn & took it back from the Gerrys, UK would put its marker on Algeria & claim income from it. That too is straight conquest.
Its easy to know who originally owned each territory because each territory is color-coded on the board to each country. Thus German territory is grey, USSR dark brown etc…
That said, neutral territories can NEVER be liberated. First of all, no one owns them at the start of the game. Second, they NEVER generate income, so IPC income is never an issue. The only time this might come into play is in the unlikely event that say, UK put an IC on Spain, Germany took it, then USA took it back from Germany. In this case, I would assume the IC reverts back to UK control, since they built it originally. But you could also argue that since the territory is now US-owned (for what its worth) that USA gets the IC. Or perhaps that UK still owns the IC but cannot use it since USA now owns the territory!Fortunately, no one ever puts an IC on a captured neutral !
Actually on 2nd thought, I’d say USA’d get the IC in the above example. Reason I think this is that siezing a neutral is a hostile act, similar to attacking an enemy-controlled territory. Thus if UK hit Eastern Europe (for example) & put an IC there, then Germany retook it, then USA took it back, that IC would be a US-owned IC most definitely. So that’s probably the same w/ neutrals–NO neutral liberation. They don’t want to be in the war anyway! Shame on you !