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deduction under section 56(c) for an affiliated group is limited
initially to an amount equal to the amount determined pursuant to
section 1.1502-2, Income Tax Regs., which regulation provides a
computation of the amount of taxes imposed on an affiliated group
under chapter one of subtitle A of the Code.
The 1502-33(d) allocation advanced by petitioner, however,
would require us to read section 56(c) as defining the term “regular
tax deduction” to mean an amount of tax that is not actually imposed
by chapter one of subtitle A of the Code. That we cannot do. The
statutory language is “taxes imposed”. The 1502-33(d) allocation is
a method of allocating the tax liability determined pursuant to
section 1.1502-2, Income Tax Regs., for purposes of determining the
earnings and profits of each member of an affiliated group. See
sec. 1552; secs. 1.1552-1(a) and (b)(1), 1.1502-33(d)(2), Income Tax
Regs. The amounts allocated to each member of an affiliated group
under the 1502-33(d) allocation are certainly derived from and may
in the aggregate equal the amount of taxes imposed on the
affiliated group pursuant to chapter one of subtitle A of the Code
for the taxable year, but are not, themselves, taxes so imposed.
The fact that section 1.1552-1(b)(2)(ii), Income Tax Regs., treats
the amounts allocated under the 1502-33(d) allocation as a liability
of each member of the affiliated group does not convert such amounts
into taxes imposed by chapter one of subtitle A of the Code for
purposes of section 56(c).24
24 Petitioner's argument that the 1502-33(d) allocation is used
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