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Treasury adopted in 1966 (1966 regulations) which substantially
overhauled the pre-1966 regulations. See T.D. 6894, 1966-2 C.B.
362; 1 Dubroff et al., Federal Income Taxation of Corporations
Filing Consolidated Returns sec. 1.02 (2d ed. 1999).
Respondent argues that our decisions in Henry C. Beck
Builders, Inc. and Henry C. Beck Co. are therefore irrelevant to
the case at bar. Respondent contends that the pre-1966
regulations were an "elimination" system where income, gains,
losses, and deductions were zeroed out (eliminated) between
members of a consolidated group; therefore, timing questions
regarding the reporting of these items could never arise. The
1966 regulations, respondent points out, provided for a
"deferral" system where income, gains, losses, and deductions
were matched between members of a consolidated group. Respondent
argues that timing issues could arise under the 1966 regulations;
therefore the 1966 regulations should be characterized as a
method of accounting.
Petitioner agrees with respondent that the consolidated
return regulations were substantially amended in 1966 and
acknowledges that Henry C. Beck Builders, Inc. and Henry C. Beck
Co. were decided under the pre-1966 regulations. Petitioner
argues, however, that the 1966 regulations did not affect the
holdings in Henry C. Beck Builders, Inc. and Henry C. Beck Co.
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