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Under legislative regulations promulgated under sections
1502 and 1503, for purposes of calculating the amount of nonlife
losses that are allowed to reduce life income pursuant to section
1503(c)(2), each nonlife company that constitutes a member of the
consolidated group is treated as a separate entity, and the CNOL
of all of the nonlife companies included in the consolidated
Federal income tax return (after allowable carrybacks) is reduced
by the separate “ineligible NOL” of each ineligible nonlife
company that constitutes a member of the consolidated group.
Sec. 1.1502-47(m)(3)(vi), Income Tax Regs. Section 1.1502-
47(m)(3)(vi)(A), Income Tax Regs., provides, in pertinent part,
as follows:
the “ineligible NOL” is in the year the loss arose the
amount of the separate net operating loss * * * of any
nonlife member that is ineligible in that year * * *.
No provision is made in the above legislative regulations to
treat a company that prior to acquisition had been a member of a
group that had filed a consolidated income tax return as part of
a single, aggregate group of companies and to net within that
group losses of ineligible nonlife companies against income of
other nonlife companies of the same acquired group.
Petitioners note, however, that the legislative regulations
under sections 1502 and 1503 provide a “reserved” subparagraph
for “acquired groups”. Sec. 1.1502-47(m)(4), Income Tax Regs.
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Last modified: May 25, 2011