- 31 -
Petitioners contend that the regulations provide that, if primary
adjustments are made to the income of one member of the group,
correlative adjustments shall be made to the other member "in all
circumstances", subject to the pending year requirement.
Additionally, petitioners argue that the regulations absolutely
mandate that, when the income of one member of the group is
increased, the correlative adjustment "shall actually be made"
and the district director "shall decrease the income of the other
member". Finally, citing Collins Elec. Co. v. Commissioner, 67
T.C. 911, 923-924 (1977), petitioners argue that correlative
13(...continued)
paragraph as "primary" adjustments) he shall also make
appropriate correlative adjustments to the income of
any other member of the group involved in the
allocation. The correlative adjustment shall actually
be made if the United States income tax liability of
the other member would be affected for any pending
taxable year. Thus, if the district director makes an
allocation of income, he shall not only increase the
income of one member of the group, but shall decrease
the income of the other member if such adjustment would
have an effect on the United States income tax
liability of the other member for any pending taxable
year. * * * If a correlative adjustment is not
actually made because it would have no effect on the
United States income tax liability of the other member
involved in the allocation for any pending taxable
year, such adjustment shall nevertheless be deemed to
have been made for the purpose of determining the
United States income tax liability of such member for a
later taxable year, or for the purposes of determining
the United States income tax liability of any person
for any taxable year. The district director shall
furnish to the taxpayer with respect to which the
primary adjustment is made a written statement of the
amount and nature of the correlative adjustment which
is deemed to have been made.
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011