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Regulations Section 1.1502-76(b)(5)(i) to become a
member of the group of which AMAX Inc. is the common
parent as of January 1, 1984.
Amax, on behalf of petitioners, filed tax information (e.g.,
income, deductions) relating to each of the petitioners for each
of the years 1984, 1985, and 1986 when it filed the consolidated
return for each of those years.
Pursuant to an agreement between Amax and Mitsui USA, Amax
included as part of the 1984 consolidated return that it filed a
"Disclosure Statement under Section 6661 of the Internal Revenue
Code".42 That disclosure statement provided:
An Agreement dated January 30, 1984[43] by and among
Alumax Inc., AMAX Inc., Mitsui & Co. Ltd. and Mitsui &
Co. (U.S.A.), Inc. as amended (a copy of which is
attached hereto) gives AMAX Inc. 80% of the voting
power of all classes of Alumax stock entitled to vote.
* * * Based on the Agreement Alumax and each of its
subsidiaries has elected under United States Treasury
Regulations Section 1.1502-76(b)(5)(i) to become a
member of the group of which AMAX Inc. is the common
parent as of January 1, 1984. Accordingly, Alumax and
each of its subsidiaries is included as of January 1,
1984 in the AMAX Inc. Consolidated Income Tax Return
filed for the year ended December 31, 1984.
Pursuant to the pledge and indemnity agreement, Amax and its
42 We believe that the stockholders of Alumax required Amax to
file the disclosure statement because of the potential tax
liability of petitioners' group relating to the consolidation
issue presented to this Court. Since the members of the Amax
group had net operating losses for each of the years 1984, 1985,
and 1986 and the members of petitioners' group had taxable income
for each of those years, any tax that might result if petitioners
ultimately were not allowed to join in the consolidated return
filed by Amax for each of those years would be a tax against
petitioners' group, and not the Amax group.
43 See supra note 41.
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