Norwest Corporation and Subsidiaries, Successor in Interest to United Banks of Colorado, Inc., and Subsidiaries, et al. - Page 89

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          taxable income is to be determined by taking into account the               
          separate taxable income of each member of the group and “[a]ny              
          consolidated net operating loss deduction”.  Section 1.1502-21(a),          
          Income Tax Regs., provides that the consolidated NOL deduction is           
          equal to the aggregate of the consolidated NOL carryovers and               
          carrybacks to the taxable year.  In pertinent part, section 1.1502-         
          21(b)(1), Income Tax Regs., provides that the consolidated NOL              
          carryovers and carrybacks to the taxable year shall consist of any          
          consolidated NOLs of the group that may be carried back or over to          
          the taxable year under the provisions of section 172(b).  Section           
          1.1502-21(f), Income Tax Regs., provides rules for determining the          
          consolidated NOL.  In pertinent part, it provides that the                  
          consolidated NOL shall be determined by taking into account the             
          separate taxable income, “as determined under �1.1502-12”, of each          
          member of the group.  Finally, section 1.1502-12, Income Tax Regs.,         
          provides that the separate taxable income of a member, “including a         
          case in which deductions exceed gross income”, is determined, with          
          certain modifications, as if the member were not a member of the            
          group.                                                                      
               The dispute between the parties concerns the calculation of            
          that portion of the consolidated NOL of the UBC affiliated group            
          for 1987 that is attributable to bank bad debt losses (and, thus,           
          subject to the special carryback and carryforward rules of section          
          172(b)(1)(L)).  For 1987, the UBC affiliated group consisted of both        
          bank and nonbank members.  The parties have no dispute over how to          
          determine the bad debt portion of the NOL of any bank member.  Their        




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