- 29 -
the parties are no longer related. In a transaction
where no gain or loss is recognized by the transferee,
the loss is deferred until the substitute basis
property is disposed of. [S. Prt. 98-169 (Vol. 1), at
496 (1984); fn. ref. omitted; emphasis added.]
The conference committee report provides:
The provision generally follows the Senate
amendment with the following modifications:
* * * * * * *
(3) The operation of the loss deferral rule is
clarified to provide that any loss sustained shall be
deferred until the property is transferred outside the
group, or until such other time as is provided by
regulations. These rules will apply to taxpayers who
have elected not to apply the deferral intercompany
transactions rules, except to the extent regulations
provide otherwise. [H. Conf. Rept. 98-861, at 1033
(1984), 1984-3 C.B. (Vol. 2) 287; emphasis added.]
The legislative history regarding section 267(f) indicates
that it was intended to "extend" the related party provisions of
section 267 even though subsection (f)(2)(A) makes subsections
(a)(1) and (d) inapplicable.25 Nevertheless, there is a general
theme that runs through the gain recognition limitation in
section 267(d) and the loss deferral provisions of subsection (f)
in that they both prevent an immediate loss deduction to the
seller and accrue the loss either in terms of a limited gain
recognition to the purchaser pursuant to section 267(d) or as a
deferral of the tax benefit of the loss pursuant to section
25Sec. 267(f)(2)(A) provides: "subsections (a)(1) and (d)
shall not apply to such loss".
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