Textron Inc. and Subsidiary Companies - Page 6

                                        - 6 -                                         
          1.   Whether Section 1.1502-14(d)(4) Operates Solely as an                  
               Exception to Section 1.1502-14(d)(3)                                   
               The flush language of section 1.1502-14(d)(4)(i), Income Tax           
          Regs., provides that if the enumerated requirements are met “then           
          any gain or loss of any member on redemption or cancellation of             
          such obligation shall be deferred, and subparagraph (3) of this             
          paragraph shall not apply.”  Petitioner reads this language to              
          mean that section 1.1502-14(d)(4), Income Tax Regs., operates               
          solely to override section 1.1502-14(d)(3), Income Tax Regs., and           
          does not otherwise operate to defer gains and losses.  We                   
               Section 1.1502-14(d)(3), Income Tax Regs., is a restoration            
          provision, i.e., it establishes the circumstances under which an            
          intercompany gain or loss deferred elsewhere in the consolidated            
          return regulations is triggered into income (i.e., restored).               
          Specifically, section 1.1502-14(d)(3), Income Tax Regs., restores           
          gains or losses deferred with respect to an obligation under                
          section 1.1502-14(d)(1), Income Tax Regs.   Gains and losses                
          deferred under section 1.1502-14(d)(1), Income Tax Regs., are               
          those that are “recognized under the Code to a member during a              
          consolidated return year because of a sale or disposition (other            
          than a redemption or cancellation) of an obligation of another              

               5 The parties agree that sec. 1.1502-14(d)(1), Income Tax              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011