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for an affiliated group, the numerator of the limiting
fraction is an amount equal to the total of the separate
taxable incomes of the members of the group from sources
without the United States, with certain adjustments that
are not material to this case. See sec. 1.1502-4(d)(1),
Income Tax Regs. The denominator of the limiting fraction
under section 904(a) is the consolidated taxable income of
the group computed in accordance with section 1.1502-11,
Income Tax Regs. Sec. 1.1502-4(d)(2), Income Tax Regs.
Thus, for each of the subject consolidated return years,
petitioner was required to compute the "taxable income from
sources without the United States" of each member of its
affiliated group of corporations. Sec. 904(a). The total
of those amounts is the numerator of the limiting fraction
under section 904(a).
In these proceedings, petitioner seeks to make two
changes in the method used to allocate and apportion
interest expenses for purposes of computing each member's
taxable income from sources without the United States.
First, petitioner seeks to apportion the interest expenses
of each member of its affiliated group using the asset
method described in section 1.861-8(e)(2)(v), Income Tax
Regs., for tax years 1982, 1983, and 1984, and using one
of the optional gross income methods described by section
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