- 15 -
T.C. Memo. 1966-273, modified and remanded on a different issue
sub nom. Likins-Foster Honolulu Corp. v. Commissioner, 417 F.2d
285 (10th Cir. 1969). The 1966 regulations abandoned that rule
in favor of a more general requirement that “The Code, or other
law, shall be applicable to the group to the extent the
[consolidated return] regulations do not exclude its
application.” Sec. 1.1502-80, Income Tax Regs.
Here the consolidated return regulations are on point, so
contrary provisions in the Code are inoperative. See First Natl.
Bank in Little Rock v. Commissioner, 83 T.C. 202 (1984) (though
sections 166 and 585 otherwise entitled bank to take a bad debt
deduction arising from an intercompany loan, election of
consolidated return treatment required deferral under sec.
1.1502-14(d)(1), Income Tax Regs.). While the 1977 stock
redemption met the requirements of section 302, AVCO and Paul
Revere had elected consolidated treatment, and thus the tax
consequences of the stock redemption were determined under
section 1504 and sections 1.1502-14(b)(1)(iii) and 1.1502-
31(b)(2)(ii), Income Tax Regs. These provisions do not exclude
stock of the redeeming corporation from the definition of
property.
11(...continued)
regulations were applicable to taxable years beginning after Dec.
31, 1965.
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