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Revenue Act of 1928 (1928 Act), ch. 852, 45 Stat. 831,35 a provi-
sion that was substantially the same as section 1502. When
Congress was considering a revision of the revenue law that
ultimately became the 1928 Act it became aware of a broad range
of problems and potential abuses that had emerged in the adminis-
tration and interpretation of the consolidated return provisions.
Many of those problems and potential abuses were set forth in the
Staff of Joint Committee, Report of the Joint Committee on
Internal Revenue Taxation (Vol. I), 63-66 (1928) (Joint Committee
report). The Joint Committee report recommended that the consol-
idated return provisions be abolished and replaced with provi-
sions permitting the operating loss of any member of an affili-
ated group, as defined in the Joint Committee report proposal, to
be offset against the net income of one or more members of that
34 (...continued)
or distraint or proceeding in court begun, in respect of
the tax for a consolidated return period, shall be applica-
ble * * * (2) to each corporation the income of which was
included in the consolidated return, or which filed Form
1122, for such period, even though it is subsequently
determined that such corporation was not a member of the
group.
35 Sec. 141(b) of the Revenue Act of 1928 (1928 Act), ch. 852,
45 Stat. 831, provided:
Regulations.--The Commissioner, with the approval of
the Secretary, shall prescribe such regulations as he may
deem necessary in order that the tax liability of an affil-
iated group of corporations making a consolidated return
and of each corporation in the group, both during and after
the period of affiliation, may be determined, computed,
assessed, collected, and adjusted in such manner as clearly
to reflect the income and to prevent avoidance of tax
liability.
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