- 32 -
shall not apply to restore that deferred loss and that loss
shall never be restored to the selling member.
(7) Basis adjustment and holding period. If paragraph
(c)(6) of this section precludes a restoration for property,
then the following rules apply:
(i) On the date the selling member
ceases to be a member, the owning member's
basis in the property shall be increased by
the amount of the selling member's unrestored
deferred loss at the time it ceased to be a
member ("increase amount"). [Emphasis
added.]
The 1984 temporary regulation does not explicitly contain a
definition of what constitutes a sale between members of a
controlled group. However, it does generally incorporate section
1.1502-13, Income Tax Regs., of the consolidated return
regulations that deal with "deferred intercompany transactions".
These regulations are said to apply, except as otherwise provided
in the 1984 temporary regulation. No express provision can be
found in the 1984 temporary regulation that defines the scope of
transactions covered other than the reference to deferred
"intercompany transactions". The term "intercompany
transactions" is not itself defined in the 1984 temporary
regulation. However, section 1.1502-13, Income Tax Regs., which
is referred to and made applicable by the 1984 temporary
27(...continued)
when either the selling member or the member
which owns the property ceases to be a member
of the group;
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