824
Opinion of the Court
back a loss to a year in which the member was not part of the consolidated group. Such returns are not at issue here. Pp. 831-834.
(c) Several objections to the single-entity approach—that it allows affiliated groups a double deduction, that the omission of PLEs from the series of items that Treas. Reg. § 1.1502-12 requires to be tallied at the consolidation level indicates that PLEs were not meant to be tallied at that level, and that the single-entity approach would permit significant tax avoidance abuses—are rejected. Pp. 834-838.
208 F. 3d 452, reversed and remanded.
Souter, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O'Connor, Scalia, Kennedy, Thomas, Ginsburg, and Breyer, JJ., joined. Thomas, J., filed a concurring opinion, post, p. 838. Stevens, J., filed a dissenting opinion, post, p. 839.
Eric R. Fox argued the cause for petitioner. With him on the briefs was Alan J. J. Swirski.
Kent L. Jones argued the cause for the United States. With him on the brief were Acting Solicitor General Under-wood, Deputy Assistant Attorney General Fallon, Deputy Solicitor General Wallace, Richard Farber, and Edward T. Perelmuter.*
Justice Souter delivered the opinion of the Court.
Under § 172(b)(1)(I) of the Internal Revenue Code of 1954, a taxpayer may carry back its "product liability loss" up to 10 years in order to offset prior years' income. The issue here is the method for calculating the product liability loss of an affiliated group of corporations electing to file a consolidated federal income tax return. We hold that the group's product liability loss must be figured on a consolidated basis in the first instance, and not by aggregating product liability losses separately determined company by company.
*Richard E. Zuckerman and Raymond M. Kethledge filed a brief for the National Association of Manufacturers et al. as amici curiae urging reversal.
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