State Farm Mutual Automobile Insurance Company and Subsidiaries - Page 12




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               alternative minimum taxable income (as defined in                      
               paragraph (b)(3)(iii) of this section).  See paragraph                 
               (a)(4), Example (4) of this section. * * *                             
               The referenced definition of consolidated adjusted net book            
          income provides that the term means consolidated net book income            
          after taking into account certain enumerated adjustments.  Sec.             
          1.56-1(b)(3)(i), Income Tax Regs.  Consolidated net book income,            
          in turn, “is the income or loss of a consolidated group as                  
          reported on its applicable financial statement”.  Sec. 1.56-                
          1(b)(3)(ii), Income Tax Regs.  The applicable financial statement           
          of a consolidated group “is the financial statement of the common           
          parent” with the highest priority under ordering rules set forth            
          in the regulatory section.  Sec. 1.56-1(c)(5)(i), Income Tax                
          Regs.  Adjustments made to such financial statement include the             
          addition of book income attributable to members of the                      
          consolidated group excluded from the applicable financial                   
          statement.  Sec. 1.56-1(d)(6)(i), Income Tax Regs.                          
          Consolidated preadjustment AMTI is explained as “the taxable                
          income of the consolidated group”, determined with the                      
          modifications prescribed in sections 56, 57, and 58 (except for             
          the book income adjustment and the ATNOL).  Sec. 1.56-                      
          1(b)(3)(iii), Income Tax Regs.                                              
               Example (4) of section 1.56-1(a)(4), Income Tax Regs.                  
          (hereinafter Example 4), illustrates the foregoing principles as            
          follows:                                                                    






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