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In November 1984, respondent promulgated 1.267(f)-1T,
Temporary Income Tax Regs., 49 Fed. Reg. 46992 (Nov. 30, 1984)
(the Temporary Regulation). The Temporary Regulation provides
generally that consolidated return principles apply under section
267(f)(2) to the deferral and restoration of loss on the sale or
exchange of property between member corporations of a controlled
group. See sec. 1.267(f)-1T(c)(1), Temporary Income Tax Regs.,
49 Fed. Reg. 46998 (Nov. 30, 1984). As in effect for the years
in issue, the consolidated return rules for deferred intercompany
transactions generally defer a loss on a sale to another
controlled group member and allow for the deferred intercompany
loss to be taken into account by the selling member upon the
earliest of various specified dates. See sec. 1.1502-
13(c)(1)(i), (f)(1), Income Tax Regs.7 One such specified date is
the date immediately preceding the time when either the selling
member or the member which owns the property ceases to be a
member of the controlled group. See sec. 1.1502-13(f)(1)(iii),
Income Tax Regs.; see also Turner Broad. Sys., Inc. & Subs. v.
Commissioner, 111 T.C. 315, 334-337 (1998).
7 Sec. 1.1502-13, Income Tax Regs., as in effect in the
taxable year at issue was repromulgated in 1995 in T.D. 8597,
1995-2 C.B. 147, which also included the 1995 final regulations
under sec. 267(f).
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