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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
11(...continued)
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
part:
(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
transferee--
(A) sells, exchanges or otherwise disposes of
such property (or exchanged basis property with
respect to such property) to a person other than a
(continued...)
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