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T.D. 9476, under Section 1561, provides guidance to corporations that are component members of a controlled group of corporations and to consolidated groups filing life-nonlife Federal income tax returns. They provide guidance to component members regarding the apportionment of tax benefit items and the amount and type of information they are required to submit with their returns.
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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