SECTION 6. FACTORS AND

GUIDELINES USED BYTHE SERVICE IN CONSIDERING REQUESTS FOR CONSENT UNDER § 1.1502–13(e)(3)

.01 Whether it is difficult for the consolidated group to account for those intercompany transactions for which consent is requested when they are treated on a single entity basis and, if so, why it is difficult to do so.

.02 Whether the Effect on CTI for the consent year or the average of the Effect on CTI for the consent year and each of the preceding two taxable years is greater than 10 percent. Consent under § 1.1502–13(e)(3) will not be granted in cases where either (a) the Effect on CTI is greater than 10 percent for the consent year or (b) the average of the Effect on CTI for the consent year and each of the two preceding taxable years is greater than 10 percent. However, consent will generally be granted in cases where (a) the Effect on CTI is less than 10 percent for the consent year and (b) the average of the Effect on CTI for the consent year and each of the two preceding taxable years is less than 10 percent.

.03 Whether the consolidated group will secure the benefit of any deduction, credit, or other allowance that it would not otherwise secure if consent to treat those intercompany transactions for which consent is requested on a separate entity basis were not granted.

.04 Whether the gains that are the subject of the consent to treat intercompany transactions on a separate entity basis

1997–43 I.R.B. 23 October 27, 1997

single entity reporting must be separately requested under applicable administrative procedures in cases where a valid consent from the Service to report intercompany transactions on a separate entity basis was not previously obtained. S e e R e v. Proc. 97–27, or its successor. Any such changes in methods of accounting are effected on a cut-off basis (that is, no § 481(a) adjustment will be made).