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provisions of this paragraph, the district director
may, upon notifying the common parent, deal directly
with any member of the group in respect of its
liability, in which event such member shall have full
authority to act for itself. [Emphasis added.]
Section 1.1502-77(c), Income Tax Regs., provides:
(c) Effect of waiver given by common parent. 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--
(1) To each corporation which was a member of the group
during any part of such taxable year, and
(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 sec. 1.1502-75.
In sum, the common parent of an affiliated group of corporations
filing a consolidated return generally is treated as the sole
agent for its subsidiaries and may execute a consent to extend
the period of limitations on behalf of the consolidated group.
However, a subsidiary shall have full authority to act for itself
where the Commissioner notifies the common parent that the
Commissioner will deal directly with the subsidiary in respect of
its tax liability. See Craigie, Inc. v. Commissioner, 84 T.C.
466, 474-475 (1985).
The parties disagree whether the issuance of separate 30-day
letters and RAR's to Hibiscus and petitioner during the
examination stage of the case constitutes direct dealing between
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