Intermet Corporation & Subsidiaries - Page 13

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               The next step in the determination of the CNOL is to combine           
          the separate taxable incomes and losses of the members.  In the             
          aggregation of the separate taxable income and losses, current              
          losses of members offset current income of other members.                   
          Certain specified consolidated items are then taken into account.           
          See sec. 1.1502-21A(f), Income Tax Regs.  SLL's are not listed              
          among the items which are to be taken into account on a                     
          consolidated basis under section 1.1502-21A(f), Income Tax Regs.            
               The consolidated return regulations specifically identify              
          several items that are to be treated on a consolidated basis.               
          Those regulations, however, do not use the term "consolidated               
          specified liability loss" or incorporate such a concept by                  
          directing that SLL's be treated on a consolidated basis.                    
          Consequently, we conclude that SLL's are not to be taken into               
          account separately as consolidated items for purposes of                    
          computing the group's CNOL.  See, e.g., Amtel Inc. v. United                
          States, 31 Fed. Cl. 598, 602 (1994), affd. without published                
          opinion 59 F.3d 181 (Fed. Cir. 1995) (court rejected the concept            
          of a "consolidated product liability loss" under the consolidated           
          return regulations).  Instead, SLL's are to be netted against the           
          member's items of income in the computation of separate taxable             
          income (or loss) under section 1.1502-12, Income Tax Regs.                  
               When allowable deductions exceed gross income, the result is           
          an NOL, sec. 172(c), and the excess may be carried backward or              





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