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We agree with respondent's interpretation of the statutory
and regulatory provisions involved in these cases. As indicated,
section 1503(c)(1) provides generally that losses of ineligible
nonlife companies may be used to reduce income of life companies
but only pursuant to regulations promulgated by the Treasury and
subject to the limitations contained in section 1503(c)(1) and
(2). Also as indicated, the legislative regulations that were
promulgated by the Treasury generally reflect a separate entity
method when calculating, under section 1503(c)(2), the amount of
nonlife losses that are to be attributed to ineligible nonlife
companies and therefore that may not be used to reduce income of
life companies. The statute and the regulations do not reflect
any special treatment for losses of ineligible nonlife companies
that previously constituted an affiliated and consolidated group.
We regard the “reserved” subparagraph (4) under section
1.1502-47(m), Income Tax Regs., as a neutral factor. That
provision simply reserves a space for regulations that may be
promulgated at a later date and that may provide a special rule
with regard to losses of ineligible nonlife companies that
previously constituted an affiliated and consolidated group.
We regard the preamble language to the regulations as merely
reflecting the Treasury’s willingness to study whether a special
rule should be promulgated for acquired previously affiliated and
consolidated groups. That language is not to be construed as
indicating that section 1.1502-47(m)(3)(vi), Income Tax Regs.,
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