26 C.F.R. § 1.1502-35T   Transfers of subsidiary stock and deconsolidations of subsidiaries (temporary).


Title 26 - Internal Revenue


Title 26: Internal Revenue
PART 1—INCOME TAXES
Basis, Stock Ownership, and Earnings and Profits Rules

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§ 1.1502-35T   Transfers of subsidiary stock and deconsolidations of subsidiaries (temporary).

(a) through (c)(3) [Reserved]. For further guidance, see §1.1502–35(a) through (c)(3).

(4) Reduction of suspended loss— (i) General rule. The amount of any loss suspended pursuant to paragraphs (c)(1) and (c)(2) of §1.1502–35 shall be reduced, but not below zero, by the subsidiary's (and any successor's) items of deduction and loss, and the subsidiary's (and any successor's) allocable share of items of deduction and loss of all lower-tier subsidiaries, that are allocable to the period beginning on the date of the disposition that gave rise to the suspended loss and ending on the day before the first date on which the subsidiary (and any successor) is not a member of the group of which it was a member immediately prior to the disposition (or any successor group), and that are taken into account in determining consolidated taxable income (or loss) of such group for any taxable year that includes any date on or after the date of the disposition and before the first date on which the subsidiary (and any successor) is not a member of such group; provided, however, that such reduction shall not exceed the excess of the amount of such items over the amount of such items that are taken into account in determining the basis adjustments made under §1.1502–32 to stock of the subsidiary (or any successor) owned by members of the group. The preceding sentence shall not apply to items of deduction and loss to the extent that the group can establish that all or a portion of such items was not reflected in the computation of the duplicated loss with respect to the subsidiary on the date of the disposition of stock that gave rise to the suspended loss.

(c)(4)(ii) through (j) [Reserved]. For further guidance, see §1.1502–35(c)(4)(ii) through (j).

(k) Effective date—(1) Applicability date. This section applies to any original consolidated Federal income tax return due (without extensions) after May 30, 2006.

(2) Expiration date. The applicability of this section will expire on May 26, 2009.

[T.D. 9264, 71 FR 30603, May 30, 2006]

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