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companies with losses.” S. Rept. 94-938 (Part 1), at 454-455
(1976), 1976-3 C.B. (Vol. 3) 49, 492-493; see also TRA 1976 sec.
1507(c), 90 Stat. 1740. At the same time, certain limitations
were enacted to “preserve[] the concept sought by Congress in the
past to the effect that some tax will be paid with respect to the
life insurance company’s investment income”. S. Rept. 94-938,
supra at 454, 1976-3 C.B. (Vol. 3) at 492.
In general, section 1501 grants to affiliated groups the
privilege of filing consolidated returns, a privilege in which
groups containing both life and nonlife members may share if an
appropriate election is made under section 1504(c). Section 1503
then addresses the computation and payment of tax for purposes of
such returns, providing in relevant part as follows:
SEC. 1503. COMPUTATION AND PAYMENT OF TAX.
(a) General Rule.--In any case in which a
consolidated return is made or is required to be made,
the tax shall be determined, computed, assessed,
collected, and adjusted in accordance with the
regulations under section 1502 [authorizing the
Secretary to establish regulations regarding
consolidated tax liability] prescribed before the last
day prescribed by law for the filing of such return.
* * * * * * *
(c) Special Rule For Application of Certain Losses
Against Income of Insurance Companies Taxed Under
Section 801.--
(1) In general.--If an election under section
1504(c)(2) is in effect for the taxable year and
the consolidated taxable income of the members of
the group not taxed under section 801 [applicable
to life insurance companies] results in a
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