SECTION 4. MODIFICATIONS

.01 Section 4.02(13) is modified to read as follows: “ Corporation that exits a consolidated group. A corporation that ceases to be a member of a consolidated group and wants to change its annual accounting period during the consolidated group’s taxable year in which the corporation ceases to be a member of the consolidated group. For purposes of the prior sentence, the consolidated group’s taxable year is determined without regard to a change in the consolidated group’s annual accounting period. A corporation that ceases to be a member of a consolidated group must continue to use the annual accounting period of the consolidated group, unless the corporation receives approval under Rev. Proc. 2002–39 to change its annual accounting period (or is required to change its annual accounting period upon joining another consolidated group). A corporation that ceases to be a member of a consolidated group during the consolidated group’s first effective year is not a member of the consolidated group for purposes of the consolidated group’s change in accounting period. See section 7.02(7) of this revenue procedure.

(a) Example 1 . On March 31, 2006, ABC Corporation ceases to be a member of a consolidated group that has a taxable year ending on November 30. ABC Corporation is not eligible to change its annual accounting period under this revenue procedure to a taxable year beginning before December 1, 2006.

(b) Example 2 . Assume the same facts as Exam- ple 1, except that the consolidated group changes its annual accounting period to a taxable year ending on August 31, effective August 31, 2006. ABC Corporation is not eligible to change its annual accounting period under this revenue procedure to a taxable year beginning before December 1, 2006.

(c) Example 3 . Assume the same facts as Exam- ple 2, except that the consolidated group changes its annual accounting period to a taxable year ending on January 31, effective January 31, 2006. ABC Corporation is not eligible to change its annual accounting period under this revenue procedure to a taxable year beginning before February 1, 2007.”

.02 Section 6.02 of Rev. Proc. 2006–45 is modified to add paragraph (4) as follows: “(4) CFCs changing to a year described in § 898(c)(2) or to a 52–53-week taxable year that references such one-month deferral year . The terms and conditions regarding financial statements and reports to creditors in section