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the separate taxable income of each member of the group is
computed, with certain modifications, in accordance with
the provisions of the Code covering the determination of
taxable income of separate corporations. Sec. 1.1502-
12(d), Income Tax Regs. Furthermore, the method of
accounting to be used by each member of the group is
determined in accordance with the provisions of section
446, as if each member filed a separate return. Sec.
1.1502-17(a), Income Tax Regs. Thus, each member of an
affiliated group of corporations determines its method of
accounting on a separate-company basis, and section 446
controls the determination of that member’s method of
accounting. See General Motors Corp. & Subs. v.
Commissioner, 112 T.C. 270, 298-299 (1999). Accordingly,
in order to resolve the issue in this case, whether
petitioner can change the manner in which the overburden
removal expenses of one of the members of its affiliated
group of corporations, Cordero, were reported on
petitioner’s returns for 1983, 1984, and 1986, we look to
Cordero’s method of accounting on a separate-company basis,
and we apply section 446 to Cordero as we would to a
separate corporation.
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