- 66 -
then applied to the excess, if any, of UBC's total preferences
over UBC's consolidated regular tax or the exemption amount. The
resulting figure is the UBC affiliated group's corporate minimum
tax.
2. Petitioner's Method
Under petitioner's method, each member of the UBC affiliated
group first determines its separate items of tax preference
pursuant to section 57. Then, each member's separate regular tax
deduction under section 56(c) (separate regular tax deduction) is
determined by using the method of allocation provided in sections
1552(a)(2) and 1.1502-33(d)(2)(ii), Income Tax Regs. (the 1502-
33(d) allocation).19 The 15-percent minimum tax rate of section
18(...continued)
believe that the minimum tax exemption amount would be used if
the consolidated regular tax were greater than zero and less than
$10,000.
19 Sec. 1552(a) provides that, pursuant to regulations
prescribed by the Secretary, the earnings and profits of each
member of an affiliated group, see sec. 1504, required to be
included in a consolidated return for such group filed for a
taxable year shall be determined by allocating the tax liability
of the group for such year among the members of the group in
accordance with one of several methods set forth in sec.
1552(a)((1) through (4)), which method must be elected in the
first consolidated return filed by the group. Beginning with its
1967 taxable year, the UBC affiliated group elected to allocate
its consolidated regular tax liability among its members in
accordance with sec. 1552(a)(2) and sec. 1.1502-33(d)(2)(ii),
Income Tax Regs. Sec. 1552(a)(2) provides:
The tax liability of the group shall be allocated to
the several members of the group on the basis of the
percentage of the total tax which the tax of such
member if computed on a separate return would bear to
the total amount of the taxes for all members of the
group so computed.
(continued...)
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