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prevent an immediate loss deduction to the seller and accrue
the loss either in terms of a limited gain recognition to
the purchaser pursuant to section 267(d) or as a deferral of
the tax benefit of the loss pursuant to section 267(f). We
think what Congress intended to ‘extend’ was the class of
transaction in which there would be a delay, of some kind,
in the recognition of a loss until there was an economically
genuine realization of the loss. [Fn. ref. omitted;
emphasis added.]
Consistent with this rationale, the Temporary Regulation
reasonably interprets section 267(f) as requiring deferral until
the loss property is disposed of outside the controlled group, at
which time there is an economically genuine realization of the
loss.
Nothing in the statutory language expressly mandates that
the benefit of the deferred loss accrue to the seller.
Petitioner cites various cases, including Hassen v. Commissioner,
supra, and Grady Whitlock Leasing Corp. v. Commissioner, T.C.
Memo. 1997-405, for the proposition that the loss that is
disallowed under section 267(a)(1) is the seller’s loss.
Therefore, petitioner concludes, the loss that is deferred under
section 267(f) must be the seller’s loss, rather than the
controlled group’s loss, and must be restored to the seller. The
cited cases, however, add nothing to the analysis other than to
show that section 267(a)(1) does not permit recognition of the
loss putatively sustained by the seller. The statute does not
otherwise identify the disallowed loss with the seller. To the
contrary, the gain-reduction adjustment under subsection (d)
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