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Based on our examination of section 1502, its legislative
history, and section 1.1502-77(c)(2), Income Tax Regs., we find
that section 1.1502-77(c)(2), Income Tax Regs., is necessary in
order to avoid an undue administrative burden on the Commissioner
and protect the interests of the Government. If, as petitioners
urge, the Court were to hold section 1.1502-77(c)(2), Income Tax
Regs., to be invalid insofar as it applies to a corporation which
joined in the filing of a consolidated return but which is
subsequently determined to be required to file a separate return,
we would be insisting upon an administratively burdensome,
impractical, and unfair rule that is not manifestly required by
section 1502. Such a rule would require the IRS to obtain one or
more separate agreements extending the period of limitations from
each and every corporation that joins in the filing of a consoli-
dated return. We believe that the imposition of such an adminis-
trative burden on the IRS would be contrary to the legislative
history of section 141(b) of the 1928 Act, the predecessor of
section 1502, which directed the Commissioner to promulgate
regulations to address "difficult and complicated problems"
relating to the administration of the consolidated return provi-
sions. See S. Rept. 960, supra, 1939-1 C.B. (Part 2) at 419. We
conclude that a determination that a corporation which joined in
the filing of a consolidated return was improperly included in
37 (...continued)
Tax Regs., under the Code of 1986.
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