- 39 -
intercompany transaction under the principles of �
1.1502-13, determined by treating the references to a
consolidated group as references to a controlled group
and by disregarding whether any of the members join in
filing consolidated returns. [Emphasis added.]
� 1.1502-13. Intercompany transactions.--
* * * * * * *
(b) Definitions. For purposes of this section--
(1) Intercompany transactions--(i) In general.
An intercompany transaction is a transaction between
corporations that are members of the same consolidated
group immediately after the transaction. S is the
member transferring property or providing services, and
B is the member receiving the property or services.
Intercompany transactions include--
(A) S's sale of property (or other
transfer, such as an exchange or
contribution) to B, whether or not gain or
loss is recognized; [Emphasis added.]
Our reading of the 1984 temporary regulation and the
nonapplicability of the binding commitment cases is consistent
with the position finally taken by respondent in section
1.267(f)-1, Income Tax Regs.32
For the foregoing reasons, we hold that MGM is not
prohibited from deducting the loss realized on its March 25,
1986, sale of UA stock to Tracinda by virtue of the application
32Respondent argues that sec. 1.267(f)-1(h), Income Tax
Regs., would apply if this case were governed by the final
regulations. That section is an anti-avoidance rule intended to
apply only to transactions structured with a principal purpose of
avoiding the purpose of sec. 267. However, respondent has
stipulated that petitioners were unaware of the loss when they
decided on the form of the transaction.
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