Textron Inc. and Subsidiary Companies - Page 15

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          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                   

          regulations were applicable to taxable years beginning after Dec.           
          31, 1965.                                                                   

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