- 20 - 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)Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
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