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									Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 1561.—Limitations                              FOR       FURTHER         INFORMATION        Tax Exemption Amount Under Section
on Certain Multiple Tax                                CONTACT: Grid Glyer, (202) 622–7930          55(d)(3), Respectively.
Benefits in the Case                                   (not a toll-free number).
of Certain Controlled                                                                                   Section 1561(a) provides that in com-
Corporations                                           SUPPLEMENTARY INFORMATION:                   puting the amount of additional tax im-
                                                                                                    posed by section 11(b)(1) (the additional
26 CFR 1.1561–1: General rules regarding certain       Background                                   tax), and the phase-out of the alternative
tax benefits available to the component members of a
                                                                                                    minimum tax exemption amount under
controlled group of corporations.                         On December 22, 2006, the IRS and the     section 55(d)(3) (the exemption amount),
                                                       Treasury Department published several        the component members of a controlled
T.D. 9476                                              temporary regulations, including tempo-      group of corporations (as defined in sec-
                                                       rary regulations under sections 1502 and     tion 1563) shall, as a first step, combine
DEPARTMENT OF THE                                      1561. See T.D. 9304 (71 FR 76904),           their taxable incomes (or alternative min-
TREASURY                                               2007–1 C.B. 423. Also on December            imum taxable incomes) for their tax years
Internal Revenue Service                               22, 2006, the IRS and the Treasury De-       that include the same December 31st date.
26 CFR Part 1                                          partment issued a notice of proposed         This taxable income (or alternative min-
                                                       rulemaking cross-referencing those tem-      imum taxable income) is for the entire
Apportionment of Tax Items                             porary regulations. See REG–161919–05        tax year of a component member, even
                                                       (71 FR 76955), 2007–1 C.B. 463. For
Among the Members of                                                                                if it was not a member of the group for
                                                       administrative reasons, these regulations    each day of that tax year. In the case of
a Controlled Group of                                  were relocated in REG–113688–09. See         the determination of the additional tax,
Corporations                                           T.D. 9451 (74 FR 25147), 2009–23 I.R.B.      the calculation is limited to the taxable
                                                       1060.                                        incomes of those component members to
AGENCY: Internal Revenue Service                          On December 26, 2007, the IRS and
(IRS), Treasury.                                                                                    which any part of the tax bracket amounts
                                                       the Treasury Department published sev-       are apportioned.
ACTION: Final regulations and removal                  eral temporary regulations, including an         The question has arisen whether a com-
of temporary regulations.                              additional temporary regulation under sec-   ponent member that incurs a loss for a
                                                       tion 1561. See T.D. 9369 (72 FR 72929),      tax year may apply that loss to reduce the
SUMMARY: This document contains fi-                    2008–1 C.B. 394. Also on December 26,        amount of the combined taxable income
nal regulations that provide guidance to               2007, the IRS and the Treasury Depart-       (or combined alternative minimum taxable
corporations that are component members                ment issued a notice of proposed rulemak-    income) of the controlled group for pur-
of a controlled group of corporations and              ing cross-referencing those temporary reg-   poses of determining the amount of the ad-
to consolidated groups filing life-nonlife             ulations. See REG–104713–07 (72 FR           ditional tax or the reduction in the exemp-
Federal income tax returns. They provide               72970), 2008–1 C.B. 409.                     tion amount, respectively. This Treasury
guidance to component members regard-                                                               decision clarifies that, for these purposes,
ing the apportionment of tax benefit items             Explanation of Provisions
                                                                                                    only the positive taxable incomes (or posi-
and the amount and type of information                                                              tive alternative minimum taxable incomes)
                                                          This Treasury decision adopts the
they are required to submit with their re-                                                          of those component members can be com-
                                                       proposed regulations (§§1.1502–43,
turns.                                                                                              bined.
                                                       1.1502–47, 1.1561–0, 1.1561–1, 1.1561–2
                                                       and 1.1561–3) with no substantive                Only if the members of an affiliated
DATES: Effective Date: These regulations
                                                       changes. However, this Treasury decision     group of corporations, as defined in section
are effective on December 28, 2009.
                                                       makes clarifying changes to §§1.1561–2       1504, elect to file a consolidated return, as
   Applicability Date: For dates of
                                                       and 1.1561–3. These changes are dis-         defined in section 1502, may these mem-
applicability,     see    §§1.1502–43(e),
                                                       cussed in the following portion of this      bers offset their income and losses in deter-
1.1502–47(t), 1.1561–1(d), 1.1561–2(f)
                                                       preamble.                                    mining their consolidated Federal income
and 1.1561–3(d). In accordance with sec-
                                                                                                    tax liability. See, for example, Woolford
tion 7805(b)(1), respective portions of this
                                                       1. Only the Positive Taxable Income or       Realty Co. v. Rose, 286 U.S. 319 (1932).
Treasury decision are applicable to consol-
                                                       Positive Alternative Minimum Taxable         Since the members of a controlled group
idated Federal income tax returns due on
                                                       Income of the Component Members of           have not elected to file a consolidated re-
or after December 21, 2009 or to taxable
                                                       a Controlled Group of Corporations           turn (even if such controlled group meets
years beginning on or after December 21,
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