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would be recognition of loss under consolidated return
principles or until such other time as may be
prescribed in regulations. [Emphasis added.]
The parties have stipulated that prior to the UA Sale,
Tracinda, MGM, and UA were members of a section 267(f) controlled
group (the Tracinda Group). After the completion of the UA Sale
on March 25, 1986, MGM was no longer part of the Tracinda Group.
Section 267(f) is silent on what constitutes a sale between
members of the same controlled group or whether deferral ends
when the selling member leaves the controlled group. This raises
the question of whether deferral under section 267(f) requires
that the relevant parties be members of the same controlled group
before and after the sale. Because there is an ambiguity in the
statute in this regard, we look to the legislative history to see
whether Congress manifested an intent that would resolve the
issue. The relevant part of the Senate report states:
The bill extends the loss disallowance and accrual
provisions of section 267 (as well as other provisions
of the Code applicable to related parties defined under
section 267) to transactions between certain controlled
corporations. For purposes of these loss disallowance
and accrual provisions, corporations will be treated as
related persons under the controlled corporation rules
of section 1563(a), except that a 50-percent control
test will be substituted for the 80-percent test.
These rules are not intended to overrule the
consolidated return regulation rules where the
controlled corporations file a consolidated return. In
the case of controlled corporations, losses will be
deferred until the property is disposed of (or
collection of a receivable is made) by the affiliate to
an unrelated third party in a transaction which results
in a recognition of gain or loss to the transferee, or
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