- 94 -
Unless the district director agrees to the contrary, an
agreement entered into by the common parent extending
the time within which an assessment may be made or levy
or proceeding in court begun in respect of the tax for
a consolidated return year shall be applicable--
* * * * * * *
(2) To each corporation the income of which was
included in the consolidated return for such taxable
year, notwithstanding that the tax liability of any
such corporation is subsequently computed on the basis
of a separate return under the provisions of �1.1502-
75.
Petitioners counter that section 1.1502-77(c)(2), Income Tax
Regs., "is an invalid exercise of the Secretary's rule-making
authority."32 According to petitioners,
Nothing in section 1502 authorizes the Secretary to
32 In support of their contention that sec. 1.1502-77(c)(2),
Income Tax Regs., is invalid, petitioners rely on J.A. Folger &
Co. v. Commissioner, 27 B.T.A. 1 (1932), which involved a year
that preceded the year (viz, 1929) in which art. 17(a)(2) of
Regulations 75, the original predecessor of sec. 1.1502-77(c)(2),
Income Tax Regs., first became effective. In J.A. Folger & Co.,
a parent corporation (parent corporation) filed consolidated
returns for certain years for itself and two of its subsidiary
corporations (subsidiary corporations). J.A. Folger & Co. v.
Commissioner, supra at 3. The parent corporation entered into an
agreement with the IRS extending the period of limitations for
the "assessment of income and war profits tax due under any
return made on behalf of that taxpayer" for one of those years.
Id. (Emphasis added.) That agreement made no mention of the
subsidiary corporations. Id. at 7-8. Under those facts, the
Board of Tax Appeals held in J.A. Folger & Co. v. Commissioner,
supra at 7-8, that the agreement that the parent corporation
entered into with the IRS did not extend the period of limita-
tions for the assessment of tax against the subsidiary corpora-
tions. J.A. Folger & Co. is factually distinguishable from the
instant case. The Forms 872 executed by Amax and Cyprus Amax,
respectively, identified the "taxpayer(s)" as "Amax Inc. and
Consolidated Subsidiaries" or "Amax Inc. and Consolidated Subs",
and not just Amax.
Page: Previous 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 NextLast modified: May 25, 2011