SECTION 8. REVOCATION OF

CONSENT UNDER SECTION 1.1502–13(e)(3)

.01 Consent to treat intercompany transactions on a separate entity basis under § 1.1502–13(e)(3) is revoked automatically for any taxable year in which the Effect on CTI or CTL, when averaged with the Effect on CTI or CTL for each of the two preceding taxable years, is greater than 5 percent. The consolidated group must attach a statement to its original return for the taxable year in which the consent is revoked, indicating that the

With respect to any carryover referred to in items (a) through (c) above, the analysis should include amounts for each of the carryover years and the date the losses or credits expire. (6) An analysis of whether any

sales of property for which consent is requested between members of the consolidated group that would be depletable or depreciable property in the hands of the buying member would result in long-term capital gain to the selling member, taking into account the provisions of §§ 1239, 1245, and 1250, relating to gain from dispositions of certain depreciable property or certain depreciable realty. (7) An analysis of whether any of

the members involved in those intercompany transactions for which consent is requested are subject to the separate return limitation year rules or the change of ownership rules under §§ 382 or 383, and a calculation of any amounts subject to limitation under those rules. (8) A description of the types of

property to which the consent would apply. (9) An analysis of the frequency

of those intercompany transactions for which consent is requested, whether they occur in the ordinary course of the consolidated group’s business, and whether the amounts or prices charged in connection with these intercompany transactions are for fair market value based on arm’s-length bargaining, providing examples thereof. Also include a discussion of whether gains from these intercompany transactions have resulted from arm’s-length charges or prices.

(10) An explanation as to why the

consent is being requested, why the consolidated group believes it should not be required to treat these intercompany transactions on a single entity basis, and how treating such transactions on a separate entity basis will clearly reflect CTI under § 446 and CTL.