Unionbancal Corporation - Page 11

                                       - 11 -                                         

             The Temporary Regulation contains a number of exceptions to             
         this general rule.  One exception (the Loss Restoration                      
         Exception) states as follows:                                                
                   (6) Exception to restoration rule for selling member               
              that ceases to be a member.  If a selling member of property            
              for which loss has been deferred ceases to be a member when             
              the property is still owned by another member, then, for                
              purposes of this section, sec. 1.1502-13(f)(1)(iii) shall               
              not apply to restore that deferred loss and that loss shall             
              never be restored to the selling member.  [Sec. 1.267(f)-               
              1(T)(c)(6), Temporary Income Tax Regs., 49 Fed. Reg. 46998              
              (Nov. 30, 1984).]                                                       
              If the Loss Restoration Exception applies, then the                     
         Temporary Regulation provides a basis adjustment (the Basis Shift            
         Exception) to the purchasing member as follows:                              
                   (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 * * *. [Sec. 1.267(f)-1(T)(c)(7), Temporary                 
                   Income Tax Regs., 49 Fed. Reg. 46998 (Nov. 30, 1984).]             
              The Temporary Regulation remained in force until superseded             
         by the final regulation, section 1.267(f)-1, Income Tax Regs.                
         (the Final Regulation).  The Final Regulation is prospective only            
         and applies with respect to transactions occurring in years                  
         beginning on or after July 12, 1995.  See T.D. 8597, 1995-2 C.B.             
         147, 160-161.  Under the Final Regulation, consolidated return               
         principles apply to restore the deferred loss to the seller when             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011