Unionbancal Corporation - Page 23

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         bill in its expanded definition of related taxpayers, but                    
         provided special rules for sales or exchanges between controlled             
         group members.  The Senate bill generally would have allowed the             
         party transferring property to a member of the same controlled               
         group to recognize the loss in the year that the loss property               
         was disposed of outside the controlled group.12                              

                    provisions of section 267 * * * to transactions between           
                    certain controlled corporations.  For purposes of these           
                    loss disallowance and accrual provisions, corporations            
                    will be treated as related persons under the controlled           
                    corporation rules of section 1563(a), except that a 50-           
                    percent control test will be substituted for the 80-              
                    percent test.  (These rules are not intended to                   
                    overrule the consolidated return regulation rules where           
                    the controlled corporations file a consolidated                   
                    return.) [H. Rept. 98-432 (Vol. 2), at 277 (1984); fn.            
                    ref. omitted.]                                                    
               12 Section 180 of the Senate bill provided in pertinent                
                    (c) Deferral (Rather Than Denial) of Loss From Sale or            
               Exchange Between Members of a Controlled Group.--Section 267           
               * * * is amended by adding at the end thereof the following            
               new subsection:                                                        
                    “(g) Deferral of Losses From Sales or Exchanges Between           
               Members of Controlled Groups.--In the case of any loss from            
               a sale or exchange of property between members of the same             
               controlled group to which subsection (a)(1) applies                    
               (determined without regard to this subsection)--                       
                         “(1) subsections (a)(1) and (d) shall not apply to           
                    such loss, but                                                    
                         “(2) no deduction shall be allowed with respect to           
                    such loss to the transferor of such property until the            
                    first taxable year of such transferor in which the                
                              (A) sells, exchanges or otherwise disposes of           
                         such property (or exchanged basis property with              
                         respect to such property) to a person other than a           

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Last modified: May 25, 2011