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its origin, its purpose.” Id.; see also Ann Jackson Family
Found. v. Commissioner, 15 F.3d at 920.
B. The Parties’ Positions
The parties have stipulated that petitioner realized a loss
of $87,927,200 on the sale of the loan portfolio to Standard
Chartered. The parties also agree that section 267(f) provides
for deferral rather than denial of losses arising from sales
between corporations that are members of the same controlled
group. The crux of their disagreement is whether the deferred
loss must be restored to petitioner, or whether the Temporary
Regulation permissibly denies the loss to petitioner, allowing
instead a basis adjustment to the purchasing member of the
controlled group.
1. Does the Temporary Regulation Violate the Mandate of the
Statute?
Petitioner argues that the Temporary Regulation imposes a
result expressly prohibited by the statute. Specifically,
petitioner notes that section 267(a)(1), if applicable, would
disallow the seller's loss, with a corresponding reduction under
subsection (d) of any subsequent gain by the purchaser upon
resale of the loss property outside the controlled group.
Section 267(f)(2)(A), however, states that subsections (a)(1) and
(d) “shall not apply” to loss sales between controlled group
members. Therefore, petitioner concludes, in the case of loss
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