Extended Carryback of Losses to or From a Consolidated Group; Correction, 44901 [2010-18677]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 75, Number 146 (Friday, July 30, 2010)]
[Rules and Regulations]
[Page 44901]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18677]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9490]
RIN 1545-BJ12


Extended Carryback of Losses to or From a Consolidated Group; 
Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final and temporary 
regulations (TD 9490) that were published in the Federal Register on 
Wednesday, June 23, 2010 (75 FR 35643) affecting corporations filing 
consolidated returns under section 1502. These regulations contain 
rules regarding the implementation of section 172(b)(1)(H) within a 
consolidated group and also permit certain acquiring consolidated 
groups to elect to waive all or a portion of the pre-acquisition 
carryback period pursuant to section 172(b)(1)(H) for specific losses 
attributable to certain acquired members.

DATES: This correction is effective on July 30, 2010, and is applicable 
on June 23, 2010.

FOR FURTHER INFORMATION CONTACT: Grid Glyer, (202) 622-7930 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final and temporary regulations (TD 9490) that are the subject 
of this document are under section 1502 of the Internal Revenue Code.

Need for Correction

    As published, the final and temporary regulations (TD 9490) contain 
errors that may prove to be misleading and are in need of 
clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 2. Section 1.1502-21T(b)(3)(v) is amended by revising paragraphs 
(B), (C)(1), (C)(2), the last sentence of paragraph (E) Example 1(i), 
the fourth sentence of paragraph (E) Example 1(iii) and the fourth 
sentence of paragraph (E) Example 2(ii) to read as follows:


Sec.  1.1502-21T  Net operating losses (temporary).

* * * * *
    (B) Taxpayer's taxable income. For purposes of computing the 
limitation under section 172(b)(1)(H)(iv) on a Five-Year Carryback to 
any consolidated return year from any consolidated return year or 
separate return year, taxpayer's taxable income as used in section 
172(b)(1)(H)(iv)(I) means consolidated taxable income (CTI) in the 
consolidated return year that is the fifth taxable year preceding the 
year of the loss. For purposes of the preceding sentence, CTI is 
computed without regard to any CNOL deduction attributable to the 
particular Five-Year Carryback or any NOL from any member's taxable 
year ending on the same date as the taxable year in which the Five-Year 
Carryback arises, or any taxable year thereafter.
    (C) Limitation on Five-Year Carrybacks to a consolidated group--(1) 
Annual limitation. The aggregate amount of Five-Year Carrybacks from 
years ending on the same date (Testing Date) to any consolidated return 
year may not exceed the excess of 50 percent of the CTI for that year 
over the total of Five-Year Carrybacks to that consolidated return year 
from years ending before the Testing Date (Annual Limitation). For 
purposes of the preceding sentence, CTI is computed without regard to--
    (i) Any CNOL deduction attributable to Five-Year Carrybacks to such 
year; or
    (ii) Any NOL from any member's taxable year ending on the Testing 
Date or any taxable year thereafter.
    (2) Pro rata absorption of limited and non-limited losses. Any 
Five-Year Carryback, and other net operating losses, from years ending 
on the same date that are available to offset CTI in the same year are 
absorbed on a pro rata basis. See Sec.  1.1502-21(b)(1).
* * * * *
    (E) * * *
    Example 1.  * * * (i) * * * There are no other NOL carrybacks 
into the X Group's 2004 consolidated taxable year.
* * * * *
    (iii) * * * The Annual Limitation on Five-Year Carrybacks will 
be $250 ($500 x 50 percent), with CTI determined without taking into 
account the portion of P's 2008 CNOL carried back to the X Group's 
2004 consolidated return year or the X Group's 2008 CNOL, which 
arises from a taxable year ending on the same date as the Five-Year 
Carryback. * * *

    Example 2.  * * *
    (ii) * * * Because S is making the sole Five-Year Carryback to 
the X Group's 2004 consolidated return year, S will make a Five-Year 
Carryback of the full $400. * * *
* * * * *

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2010-18677 Filed 7-29-10; 8:45 am]
BILLING CODE 4830-01-P