Unionbancal Corporation - Page 16

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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            
              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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Last modified: May 25, 2011