Announcement 2023-16, 2023-20
Internal Revenue Bulletin 2023-34 · 2026-10-03 edition · updated 2026-10-04 · United States
IRB 854, is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.
Drafting Information
The principal authors of this document are Kelton P. Frye and William W. Burhop of the Office of Associate Chief Counsel (Corporate). Other personnel from the Treasury Department and the IRS participated in its development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 5
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend 26 CFR parts 1, 5, 301, and 602 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by removing the entries for §§1.1503-2, 1.1502-9A, 1.1502-15A, 1.1502-21A, 1.1502-22A, 1.1502-23A, 1.1502-41A, 1.1502-79A, 1.1502-91A, 1.1502-92A, 1.1502-93A, 1.1502-94A, 1.1502-95A, 1.1502-96A, 1.1502-98A, and 1.1502-99A to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
§1.57-1 [Amended]
Par. 2. Section 1.57-1 is amended by removing the text “and § 1.1502-12(g)” from paragraph (b)(4)(ii).
Par. 3. Section 1.167(c)-1 is amended by revising paragraph (a)(5) to read as follows:
§1.167(c)-1 Limitations on methods of computing depreciation under section 167(b)(2), (3), and (4).
(a) * * *
(5) See §§1.1502-13 and 1.1502-68 for provisions dealing with depreciation of property received by a member of an affiliated group from another member of the group during a consolidated return period.
§1.279-6 [Amended]
August 21, 2023 584 Bulletin No. 2023–34
§1.1502-1 Definitions.
For purposes of the consolidated return regulations:
(g) Consolidated return regulations . The term consolidated return regulations means the regulations under section 1502.
(l) U.S. territory. The term U.S. terri- tory means—
(1) American Samoa; (2) The Commonwealth of the Northern Mariana Islands;
(3) The Commonwealth of Puerto Rico;
(4) Guam; and (5) The Virgin Islands of the United States.
§ 1.1502-3 [Amended]
Par. 8. Section 1.1502-3 is amended by removing and reserving paragraph (e).
§1.1502-4 [Amended]
Par. 9. Section 1.1502-4 is amended by removing the text “possession” from paragraph (d)(1) and adding the text “U.S. territory” in its place.
Par. 10. Section 1.1502-5 is revised to read as follows:
§1.1502-5 Estimated tax.
(a) General rule —(1) Consolidated estimated tax . If a group files a consolidated return for two consecutive taxable years, it must make payments of estimated tax on a consolidated basis for each subsequent taxable year until separate returns are filed. When filing on a consolidated basis, the group is generally treated as a single corporation for purposes of section 6655 (relating to payment of estimated tax by corporations). If separate returns are filed by the members for a taxable year, the amount of any estimated tax payments made with respect to a consolidated estimated tax for the year is credited against the separate tax liabilities of the members in any reasonable manner designated by the common parent.
(2) First two consolidated return years. For its first two consolidated return years,
a group may make payments of estimated tax on either a consolidated or a separate member basis. The amount of any separate estimated tax payments is credited against the consolidated tax liability of the group.
(b) Addition to tax for failure to pay estimated tax under section 6655— (1) Consolidated return filed. For its first two consolidated return years, a group may compute the amount of the penalty (if any) under section 6655 on a consolidated basis or a separate member basis, regardless of the method of payment. Thereafter, the group must compute the penalty for any consolidated return year on a consolidated basis.
(2) Computation of penalty on con- solidated basis. (i) This paragraph (b) (2) provides rules for computing the penalty under section 6655 on a consolidated basis.
(ii) The tax shown on the return for the preceding taxable year referred to in section 6655(d)(1)(B)(ii) is, if a consolidated return was filed for that preceding year, the tax shown on the consolidated return for that preceding year or, if a consolidated return was not filed for that preceding year, the aggregate of the taxes shown on the separate returns of the common parent and any other corporation that was a member of the same affiliated group as the common parent for that preceding year.
(iii) If estimated tax was not paid on a consolidated basis, the amount of the group’s payments of estimated tax for the taxable year is the aggregate of the payments made by all members for the year.
(iv) If the common parent is otherwise eligible to use the section 6655(d)(1)(B) (ii) required annual payment rule, that rule applies only if the group’s consolidated return, or each member’s separate return if the group did not file a consolidated return, for the preceding taxable year was a taxable year of 12 months.
(3) Computation of penalty on separate member basis. To compute any penalty under section 6655 on a separate member basis, for purposes of section 6655(d)(1) (B)(i), the “tax shown on the return” for the taxable year is the portion of the tax shown on the consolidated return allocable to the member under paragraph (b) (6) of this section. If the member was
included in the consolidated return filed by the group for the preceding taxable year, for purposes of section 6655(d)(1) (B)(ii), the “tax shown on the return” for the preceding taxable year for any member is the portion of the tax shown on the consolidated return for the preceding year allocable to the member under paragraph (b)(6) of this section.
(4) Consolidated payments if separate returns filed. If the group does not file a consolidated return for the taxable year but makes payments of estimated tax on a consolidated basis, for purposes of section 6655(b)(1)(B), the “amount (if any) of the installment paid” by any member is an amount apportioned to the member in any reasonable manner designated by the common parent. If a member was included in the consolidated return filed by the group for the preceding taxable year, the amount of the member’s penalty under section 6655 is computed on the separate member basis described in paragraph (b)(3) of this section.
(5) Tax defined. For purposes of this section, the term “tax” means the excess of—
(i) The sum of— (A) The consolidated tax imposed by section 11 or subchapter L of chapter 1, whichever applies;
(B) The tax imposed by section 55(a); plus
(C) The tax imposed by section 59A; over
(ii) The credits against tax provided by part IV of subchapter A of chapter 1 of the Internal Revenue Code.
(6) Allocation of consolidated tax lia- bility for determining earnings and profits. For purposes of this section, the tax shown on a consolidated return is allocated to the members of the group by allocating any tax described in paragraph (b)(5)(i) of this section, net of allowable credits under paragraph (b)(5)(ii) of this section, under the method that the group has elected pursuant to section 1552 and §1.1502-33(d).
(c) Examples. The provisions of this section are illustrated by the following examples.
(1) Example 1. Corporations P and S1 file a consolidated return for the first time for calendar year 2021. P and S1 also file consolidated returns for calendar year 2022 and calendar year 2023. Under paragraph (a)(2) of this section, for the 2021 and 2022 taxable years, P and S1 may pay estimated tax on
Bulletin No. 2023–34 585 August 21, 2023
either a separate or consolidated basis. Under paragraph (a)(1) of this section, for the 2023 taxable year, the group must pay its estimated tax on a consolidated basis. In determining whether P and S1 come within the exception provided in section 6655(d)(1) (B)(ii) for 2023, the “tax shown on the return” is the tax shown on the consolidated return for the 2022 taxable year.
(2) Example 2 . Corporations P, S1, and S2 file a consolidated return for the first time for calendar year 2021 and file their second consolidated return for calendar year 2022. S2 ceases to be a member of the group on September 15, 2023. Under paragraph (b)(2) of this section, in determining whether the group (which no longer includes S2) comes within the exception provided in section 6655(d)(1)(B)(ii) for 2023, the “tax shown on the return” is the tax shown on the consolidated return for calendar year 2022. (3) Example 3. Corporations P and S1 file a consolidated return for the first time for calendar year 2021 and file their second consolidated return for calendar year 2022. Corporation S2 becomes a member of the group on July 1, 2023, and joins in the filing of the consolidated return for calendar year 2023. Under paragraph (b)(2) of this section, in determining whether the group (which now includes S2) comes within the exception provided in section 6655(d)(1)(B)(ii) for 2023, the “tax shown on the return” is the tax shown on the consolidated return for calendar year 2022. Any tax of S2 for any separate return year is not included as a part of the “tax shown on the return” for purposes of applying section 6655(d)(1)(B)(ii).
(4) Example 4. Corporations X and Y file consolidated returns for the calendar years 2021 and 2022 and separate returns for calendar year 2023. Under paragraph (b)(3) of this section, in determining whether X or Y comes within the exception provided in section 6655(d)(1)(B)(ii) for 2023, the “tax shown on the return” is the amount of tax shown on the consolidated return for 2022 allocable to X and to Y in accordance with paragraph (b)(6) of this section.
(d) Cross-references —(1) For provisions relating to quick refunds of corporate estimated tax payments, see §§1.1502-78 and 1.6425-1 through 1.6425-3.
(2) For provisions relating to depositing estimated taxes, see §1.6302-1(b).
(e) Applicability date. This section applies to any taxable year for which the due date of the income tax return (without regard to extensions) is on or after the date final regulations are published in the Federal Register . For prior years, see §1.1502-5 (as contained in the 26 CFR edition revised as of April 1, 2023).
§1.1502-6 [Amended]
Par. 11. Section 1.1502-6 is amended by removing the text “he” from paragraph (b) and adding the text “the Commissioner” in its place.
Par. 12. Section 1.1502-9 is amended by:
Removing the text “§1.904-4(m)” from paragraph (a) and adding the text “§1.904-5(a)(4)(v)” in its place.
Removing the text “(a)(8)” from the first sentence of paragraph (b)(1) and adding the text “(a)(6)” in its place.
Removing the text “§§1.861-9T(g) (3) and 1.861-12T” from the second sentence of paragraph (c)(2)(ii) and adding the text “§§1.861-9T(g)(3), 1.861-12, and 1.861-13” in its place.
Removing the text “§1.861-9T(g) (1)” from paragraph (c)(2)(ii) wherever it appears and adding the text “§1.861-9(g) (1)” in its place.
Removing the text “, fair market value,” from the sixth sentence of paragraph (c)(2)(ii).
Removing the text “§1.861-9T(g) (2))” from paragraph (c)(2)(ii) wherever it appears and adding the text “§1.861-9(g) (2))” in its place.
Removing the text “If the group uses the tax book value method, the” from the
eighth sentence of paragraph (c)(2)(ii) and adding the text “The” in its place.
Revising the heading of paragraph (c)(2)(iii).
Removing the text “a group uses the tax book value method of valuing assets for purposes of paragraph (c)(2)(ii) of this section and” from the first sentence of paragraph (c)(2)(iii).
§1.1502-9 Consolidated overall foreign losses, separate limitation losses, and overall domestic losses.
(c) * * * (2) * * * (iii) Limitation on member’s portion.
Par. 13. Section 1.1502-11 is amended by:
Revising the introductory text in paragraph (a).
Revising paragraphs (a)(2) through (4).
Adding the text “and” at the end of paragraph (a)(5).
Removing paragraph (a)(6).
Redesignating paragraph (a)(7) as paragraph (a)(6).
In newly redesignated paragraph (a) (6), removing the text “; and”, and adding the text “.” in its place.
Removing paragraph (a)(8).
In paragraph (b)(2)(iii), designating Examples 1 through 3 as paragraphs (b)(2) (iii)(A) through (C), respectively.
In newly redesignated paragraphs (b)(2)(iii)(A) through (C), further redesignating the paragraphs in the first column as the paragraphs in the second column:
| Old Paragraphs | New Paragraphs |
|---|---|
| (b)(2)(iii)(A)(a), (b), and (c)……………….. | (b)(2)(iii)(A)(1), (2), and (3) |
| (b)(2)(iii)(B)(a), (b), (c), and (d)…………… | (b)(2)(iii)(B)(1), (2), (3), and (4) |
| (b)(2)(iii)(C)(a), (b), (c), (d), and (e)……… | (b)(2)(iii)(C)(1), (2), (3), (4), and (5) |
Removing the text “(or 1.150279A, as appropriate)” from newly redesignated paragraphs (b)(2)(iii)(A)( 3 ) and (b)(2)(iii)(B)( 4 ).
Removing the last sentence of paragraph (c)(7).
The revisions read as follows:
§1.1502-11 Consolidated taxable income.
(a) In general. The consolidated taxable income (CTI) for a consolidated return year is determined by taking into account:
(2) Any consolidated net operating loss (CNOL) deduction (see §1.1502-21 for the computation of the CNOL deduction);
(3) Any consolidated capital gain net income (see §1.1502-22 for the
August 21, 2023 586 Bulletin No. 2023–34
computation of consolidated capital gain net income);
(4) Any consolidated section 1231 net loss (see §1.1502-23 for the computation of consolidated section 1231 net loss);
Par. 14. Section 1.1502-12 is amended by:
Revising paragraph (b).
Removing and reserving paragraphs (e), (g), and (m).
Revising paragraph (n).
Removing and reserving paragraph (q).
The revisions read as follows:
§1.1502-12 Separate taxable income.
(b) Any deduction that is disallowed under §1.1502-15 must be taken into account as provided in that section.
(n) No deduction under section 243(a) (1) or section 245 (relating to deductions with respect to dividends received) is taken into account;
Par. 15. Section 1.1502-13 is amended by:
Revising the second sentence of paragraph (a)(3)(i).
Revising paragraph (a)(6)(ii).
Adding the text “of this section” after the text “paragraph (c)(4)(i)(A)” in the first sentence of paragraph (c)(4)(i) (B).
Revising the last sentence of paragraph (c)(5).
In paragraph (d)(3), designating Examples 1 through 5 as paragraphs (d) (3)(i) through (v), respectively.
In newly redesignated paragraphs (d)(3)(i) through (v), further redesignating paragraphs in the first column as paragraphs in the second column:
Old Paragraphs New Paragraphs (d)(3)(i)(a), (b), (c), (d), (e), (f), and (g)….. (d)(3)(i)(A), (B), (C), (D), (E), (F), and (G) (d)(3)(ii)(a), (b), and (c)……………...……. (d)(3)(ii)(A), (B), and (C) (d)(3)(iii)(a) and (b)………………………… (d)(3)(iii)(A) and (B) (d)(3)(iv)(a), (b), and (c)…………………… (d)(3)(iv)(A), (B), and (C) (d)(3)(v)(a) and (b)………..……………….. (d)(3)(v)(A) and (B)
- In paragraph (d)(3), for each newly redesignated paragraph listed in the
“Paragraph” column, removing the text indicated in the “Remove” column and
adding in its place the text indicated in the “Add” column:
Paragraph Remove Add (d)(3)(i)(E) paragraph (a) of this Example 1 paragraph (d)(3)(i)(A) of this section ( Example 1 ) (d)(3)(i)(F) paragraph (a) of this Example 1 paragraph (d)(3)(i)(A) of this section ( Example 1 ) (d)(3)(i)(G) paragraph (a) of this Example 1 paragraph (d)(3)(i)(A) of this section ( Example 1 ) (d)(3)(ii)(C) paragraph (a) of this Example 2 paragraph (d)(3)(ii)(A) of this section ( Example 2 )
In paragraph (e)(1)(v), designating Examples 1 through 3 as paragraphs (e)(1) (v)(A) through (C), respectively.
In newly redesignated paragraphs (e)(1)(v)(A) through (C), further
redesignating paragraphs in the first column as paragraphs in the second column:
Old Paragraphs New Paragraphs (e)(1)(v)(A)(a), (b), (c)(i), (c)(ii), (d), and (e)……………… (e)(1)(v)(A)( 1 ), ( 2 ), ( 3 )( i ), ( 3 )( ii ), ( 4 ), and ( 5 ) (e)(1)(v)(B)(a), (b)(i), (b)(ii), and (c)……….……………… (e)(1)(v)(B)( 1 ), ( 2 )( i ), ( 2 )( ii ), and ( 3 ) (e)(1)(v)(C)(a) and (b)……………………………………… (e)(1)(v)(C)( 1 ) and ( 2 )
- In paragraph (e)(1)(v), for each newly redesignated paragraph listed in the
“Paragraph” column, removing the text indicated in the “Remove” column and
adding in its place the text indicated in the “Add” column:
Paragraph Remove Add (e)(1)(v)(A)( 4 ) paragraph (a) of this Example 1 paragraph (e)(1)(v)(A)( 1 ) of this section ( Example 1 ) (e)(1)(v)(A)( 5 ) paragraph (a) of this Example 1 paragraph (e)(1)(v)(A)( 1 ) of this section ( Example 1 ) (e)(1)(v)(B)( 1 ) Example 1 paragraph (e)(1)(v)(A)( 1 ) of this section ( Example 1 ) (e)(1)(v)(B)( 3 ) paragraph (a) of this Example 2 paragraph (e)(1)(v)(B)( 1 ) of this section ( Example 2 )
Bulletin No. 2023–34 587 August 21, 2023
Removing the second sentence from paragraph (f)(5)(ii)(B)( 2 ).
Removing the text “In either case, the” from the third sentence of paragraph (f)(5)(ii)(B)( 2 ) and adding the text “The” in its place.
Revising paragraph (f)(5)(ii)(F).
Revising paragraphs (f)(6)(ii) and (v).
In paragraph (f)(7), designating Examples 1 through 7 as paragraphs (f)(7) (i) through (vii), respectively.
In newly redesignated paragraphs (f)(7)(i) through (vii), further redesignating paragraphs in the first column as paragraphs in the second column:
| Old Paragraphs | New Paragraphs |
|---|---|
| (f)(7)(i)(a), (b), (c), (d), and (e)……………. | (f)(7)(i)(A), (B),(C), (D), and (E) |
| (f)(7)(ii)(a), (b), (c), (d), (e), (f), and (g)….. | (f)(7)(ii)(A), (B), (C), (D), (E), (F), and (G) |
| (f)(7)(iii)(a), (b), (c), and (d)………………. | (f)(7)(iii)(A), (B), (C), and (D) |
| (f)(7)(iv)(a) and (b)………………………… | (f)(7)(iv)(A) and (B) |
| (f)(7)(v)(a), (b), (c), and (d)……………….. | (f)(7)(v)(A), (B), (C), and (D) |
| (f)(7)(vi)(a), (b), and (c)……………………. | (f)(7)(vi)(A), (B), and (C) |
| (f)(7)(vii)(a), (b), (c), and (d)………………. | (f)(7)(vii)(A), (B), (C), and (D) |
- In paragraph (f)(7), for each newly redesignated paragraph listed in the
“Paragraph” column, removing the text indicated in the “Remove” column and
adding in its place the text indicated in the “Add” column:
| Paragraph | Remove | Add |
|---|---|---|
| (f)(7)(i)(D) | paragraph (a) of this_Example 1_ | paragraph (f)(7)(i)(A) of this section (Example 1) |
| (f)(7)(i)(E) | paragraph (a) of this_Example 1_ | paragraph (f)(7)(i)(A) of this section (Example 1) |
| (f)(7)(ii)(D) | paragraph (a) of this_Example 2_ | paragraph (f)(7)(ii)(A) of this section (Example 2) |
| (f)(7)(ii)(D) | paragraph (c) of this_Example 2_ | paragraph (f)(7)(ii)(C) of this section (Example 2) |
| (f)(7)(ii)(E) | paragraph (a) of this_Example 2_ | paragraph (f)(7)(ii)(A) of this section (Example 2) |
| (f)(7)(ii)(F) | paragraph (a) of this_Example 2_ | paragraph (f)(7)(ii)(A) of this section (Example 2) |
| (f)(7)(ii)(F) | paragraph (c) of this_Example 2_ | paragraph (f)(7)(ii)(C) of this section (Example 2) |
| (f)(7)(ii)(F) | paragraph (d) of this_Example 2_ | paragraph (f)(7)(ii)(D) of this section (Example 2) |
| (f)(7)(ii)(G) | paragraph (a) of this_Example 2_ | paragraph (f)(7)(ii)(A) of this section (Example 2) |
| (f)(7)(ii)(G) | paragraph (c) of this_Example 2_ | paragraph (f)(7)(ii)(C) of this section (Example 2) |
| (f)(7)(iii)(C) | paragraph (a) of this_Example 3_ | paragraph (f)(7)(iii)(A) of this section (Example 3) |
| (f)(7)(iii)(C) | paragraph (b) of this_Example 3_ | paragraph (f)(7)(iii)(B) of this section (Example 3) |
| (f)(7)(v)(C) | paragraph (a) of this_Example 4_ | paragraph (f)(7)(v)(A) of this section (Example 5) |
| (f)(7)(v)(C) | paragraph (b) of this_Example 4_ | paragraph (f)(7)(v)(B) of this section (Example 5) |
| (f)(7)(v)(D) | paragraph (a) of this_Example 4_ | paragraph (f)(7)(v)(A) of this section (Example 5) |
| (f)(7)(vi)(C) | paragraph (a) of this_Example 5_ | paragraph (f)(7)(vi)(A) of this section (Example 6) |
| (f)(7)(vii)(C) | paragraph (a) of this_Example 6_ | paragraph (f)(7)(vii)(A) of this section (Example 7) |
| (f)(7)(vii)(C) | paragraph (b) of this_Example 6_ | paragraph (f)(7)(vii)(B) of this section (Example 7) |
| (f)(7)(vii)(D) | paragraph (c) of this_Example 6_ | paragraph (f)(7)(vii)(C) of this section (Example 7) |
In paragraph (g)(7)(ii), designating Examples 1 through 11 as paragraphs (g) (7)(ii)(A) through (K), respectively.
In newly redesignated paragraphs (g)(7)(ii)(A) through (K), further
redesignating paragraphs in the first column as paragraphs in the second column:
August 21, 2023 588 Bulletin No. 2023–34
| Old Paragraphs | New Paragraphs |
|---|---|
| (g)(7)(ii)(A)(i), (ii), (iii), and (iv)................................................................... | (g)(7)(ii)(A)(1), (2), (3), and (4) |
| (g)(7)(ii)(B)(i), (ii), (iii), (iv), (v), (vi), (vii), and (viii).................................. | (g)(7)(ii)(B)(1), (2), (3), (4), (5), (6), (7), and (8) |
| (g)(7)(ii)(C)(i), (ii), (iii), and (iv)................................................................... | (g)(7)(ii)(C)(1), (2), (3), and (4) |
| (g)(7)(ii)(D)(i), (ii), (iii), (iv), and (v)............................................................ | (g)(7)(ii)(D)(1), (2), (3), (4), and (5) |
| (g)(7)(ii)(E)(i) and (ii).................................................................................... | (g)(7)(ii)(E)(1) and (2) |
| (g)(7)(ii)(F)(i) and (ii)..................................................................................... | (g)(7)(ii)(F)(1) and (2) |
| (g)(7)(ii)(G)(i) and (ii).................................................................................... | (g)(7)(ii)(G)(1) and (2) |
| (g)(7)(ii)(H)(i) and (ii).................................................................................... | (g)(7)(ii)(H)(1) and (2) |
| (g)(7)(ii)(I)(i) and (ii)..................................................................................... | (g)(7)(ii)(I)(1) and (2) |
| (g)(7)(ii)(J)(i), (ii), (iii), and (iv).................................................................... | (g)(7)(ii)(J)(1), (2), (3), and (4) |
| (g)(7)(ii)(K)(i), (ii), and (iii)........................................................................... | (g)(7)(ii)(K)(1), (2), and (3) |
- In paragraph (g)(7)(ii), for each newly redesignated paragraph listed in the
“Paragraph” column, removing the text indicated in the “Remove” column and
adding in its place the text indicated in the “Add” column:
| Paragraph | Remove | Add |
|---|---|---|
| (g)(7)(ii)(A)(3) | paragraph (i) of this_Example 1_ | paragraph (g)(7)(ii)(A)(1) of this section (Example 1) |
| (g)(7)(ii)(A)(3) | paragraph (ii) of this_Example 1_ | paragraph (g)(7)(ii)(A)(2) of this section (Example 1) |
| (g)(7)(ii)(A)(4) | paragraph (i) of this_Example 1_ | paragraph (g)(7)(ii)(A)(1) of this section (Example 1) |
| (g)(7)(ii)(A)(4) | paragraph (ii) of this_Example 1_ | paragraph (g)(7)(ii)(A)(2) of this section (Example 1) |
| (g)(7)(ii)(B)(3) | paragraph (i) of this_Example 2_ | paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(B)(3) | paragraph (ii) of this_Example 2_ | paragraph (g)(7)(ii)(B)(2) of this section (Example 2) |
| (g)(7)(ii)(B)(4) | paragraph (i) of this_Example 2_ | paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(B)(4) | paragraph (iii) of this Example 2 | paragraph (g)(7)(ii)(B)(3) of this section (Example 2) |
| (g)(7)(ii)(B)(5) | paragraph (i) of this_Example 2_ | paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(B)(6) | same as paragraph (i) of this_Example 2_ | same as in paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(B)(6) | paragraph (ii) of this_Example 2_ | paragraph (g)(7)(ii)(B)(2) of this section (Example 2) |
| (g)(7)(ii)(B)(7) | paragraph (i) of this_Example 2_ | paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(B)(8) | paragraph (i) of this_Example 2_ | paragraph (g)(7)(ii)(B)(1) of this section (Example 2) |
| (g)(7)(ii)(C)(3) | paragraph (i) of this_Example 3_ | paragraph (g)(7)(ii)(C)(1) of this section (Example 3) |
| (g)(7)(ii)(C)(3) | paragraph (ii) of this_Example 3_ | paragraph (g)(7)(ii)(C)(2) of this section (Example 3) |
| (g)(7)(ii)(C)(4) | paragraph (i) of this_Example 3_ | paragraph (g)(7)(ii)(C)(1) of this section (Example 3) |
| (g)(7)(ii)(C)(4) | paragraph (ii) of this_Example 3_ | paragraph (g)(7)(ii)(C)(2) of this section (Example 3) |
| (g)(7)(ii)(C)(4) | paragraph (ii) of this_Example 3_ | paragraph (g)(7)(ii)(C)(2) of this section (Example 3) |
| (g)(7)(ii)(D)(3) | paragraph (i) of this_Example 4_ | paragraph (g)(7)(ii)(D)(1) of this section (Example 4) |
| (g)(7)(ii)(D)(4) | paragraph (i) of this_Example 4_ | paragraph (g)(7)(ii)(D)(1) of this section (Example 4) |
| (g)(7)(ii)(D)(5) | paragraph (i) of this_Example 4_ | paragraph (g)(7)(ii)(D)(1) of this section (Example 4) |
| (g)(7)(ii)(J)(2) | paragraph (iii) of Example 1 of this paragraph (g)(7) |
paragraph (g)(7)(ii)(A)(3) of this section (Example 1) |
| (g)(7)(ii)(J)(3) | paragraph (i) of this_Example 10_ | paragraph (g)(7)(ii)(J)(1) of this section (Example 10) |
| (g)(7)(ii)(K)(3) | paragraph (i) of this_Example 11_ | paragraph (g)(7)(ii)(K)(1) of this section (Example 11) |
Bulletin No. 2023–34 589 August 21, 2023
Redesignating paragraphs (h)(2)(v) (a) and (b) as paragraphs (h)(2)(v)(A) and (B).
In paragraph (j)(9), designating Examples 1 through 7 as paragraphs (j)(9) (i) through (vii), respectively.
In newly redesignated paragraphs (j)(9)(i) through (vii), further redesignating paragraphs in the first column as paragraphs in the second column:
| Old Paragraphs | New Paragraphs |
|---|---|
| (j)(9)(i)(a), (b), (c), (d), and (e)……………. | (j)(9)(i)(A), (B), (C), (D), and (E) |
| (j)(9)(ii)(a) and (b)…………….……………. | (j)(9)(ii)(A) and (B) |
| (j)(9)(iii)(a), (b), and (c)……….……...……. | (j)(9)(iii)(A), (B), and (C) |
| (j)(9)(iv)(a), (b), (c), (d), and (e).………….. | (j)(9)(iv)(A), (B), (C), (D), and (E) |
| (j)(9)(v)(a) and (b)….……….……………... | (j)(9)(v)(A) and (B) |
| (j)(9)(vi)(a) and (b)…………………………. | (j)(9)(vi)(A) and (B) |
| (j)(9)(vii)(a) and (b)…….……..……………. | (j)(9)(vii)(A) and (B) |
- In paragraph (j)(9), for each newly redesignated paragraph listed in the
“Paragraph” column, removing the text indicated in the “Remove” column and
adding in its place the text indicated in the “Add” column:
| Paragraph | Remove | Add |
|---|---|---|
| (j)(9)(i)(E) | paragraph (a) of this_Example 1_ | paragraph (j)(9)(i)(A) of this section (Example 1) |
| (j)(9)(iv)(D) | paragraph (a) of this_Example 4_ | paragraph (j)(9)(iv)(A) of this section (Example 1) |
| (j)(9)(iv)(E) | paragraph (a) of this_Example 4_ | paragraph (j)(9)(iv)(A) of this section (Example 1) |
Revising paragraph (l)(6).
Redesignating paragraph (m) as paragraph (l)(7).
Revising newly redesignated paragraph (l)(7).
Adding paragraphs (l)(8) and (9).
The revisions and additions read as follows:
§1.1502-13 Intercompany transactions.
(3) * * *
(i) * * * See §§1.1502-17 and 1.4461(c)(2)(iii). * * *
(6) * * * (ii) Table of examples . This section contains the following examples:
| Rule | General Location | Paragraph | Example |
|---|---|---|---|
| (A) Matching rule. | §1.1502-13(c)(7)(ii) | (A) | Example 1. Intercompany sale of land followed by sale to a nonmember. |
| (B) | Example 2. Dealer activities. | ||
| (C) | Example 3. Intercompany section 351 transfer. | ||
| (D) | Example 4. Depreciable property. | ||
| (E) | Example 5. Intercompany sale followed by installment sale. | ||
| (F) | Example 6. Intercompany sale of installment obligation. | ||
| (G) | Example 7. Performance of services. | ||
| (H) | Example 8. Rental of property. | ||
| (I) | Example 9. Intercompany sale of a partnership interest. | ||
| (J) | Example 10. Net operating losses subject to section 382 or the SRLY rules. |
||
| (K) | Example 11. Section 475. | ||
| (L) | Example 12. Section 1092. | ||
| (M) | Example 13. [Reserved] | ||
| (N) | Example 14. Source of income under section 863. |
August 21, 2023 590 Bulletin No. 2023–34
| Rule | General Location | Paragraph | Example |
|---|---|---|---|
| (O) | Example 15. Section 1248. | ||
| (P) | Example 16. Intercompany stock distribution followed by section 332 liquidation. |
||
| (Q) | Example 17. Intercompany stock sale followed by section 355 distribution. |
||
| (R) | Example 18. Redetermination of attributes for section 250 purposes. |
||
| (B) Acceleration rule. | §1.1502-13(d)(3) | (i) | Example 1. Becoming a nonmember—timing. |
| (ii) | Example 2. Becoming a nonmember—attributes. | ||
| (iii) | Example 3. Selling member’s disposition of installment note. |
||
| (iv) | Example 4. Cancellation of debt and attribute reduction under section 108(b). |
||
| (v) | Example 5. Section 481. | ||
| (C) Simplifying rules—inventory. |
§1.1502-13(e)(1)(v) | (A) | Example 1. Increment averaging method. |
| (B) | Example 2. Increment valuation method. | ||
| (C) | Example 3. Other reasonable inventory methods. | ||
| (D) Stock of members. | §1.1502-13(f)(7) | (i) | Example 1. Dividend exclusion and property distribution. |
| (ii) | Example 2. Excess loss accounts. | ||
| (iii) | Example 3. Intercompany reorganization. | ||
| (iv) | Example 4. All cash intercompany reorganization under section 368(a)(1)(D). |
||
| (v) | Example 5. Stock redemptions and distributions. | ||
| (vi) | Example 6. Intercompany stock sale followed by section 332 liquidation. |
||
| (vii) | Example 7. Intercompany stock sale followed by section 355 distribution. |
||
| (E) Obligations of members. |
§1.1502-13(g)(7)(ii) | (A) | Example 1. Interest on intercompany obligation. |
| (B) | Example 2. Intercompany obligation becomes nonintercompany obligation. |
||
| (C) | Example 3. Loss or bad debt deduction with respect to intercompany obligation. |
||
| (D) | Example 4. Intercompany nonrecognition transactions. | ||
| (E) | Example 5. Assumption of intercompany obligation. | ||
| (F) | Example 6. Extinguishment of intercompany obligation. | ||
| (G) | Example 7. Exchange of intercompany obligations. | ||
| (H) | Example 8. Tax beneft rule. | ||
| (I) | Example 9. Issuance at off-market rate of interest. | ||
| (J) | Example 10. Nonintercompany obligation becomes intercompany obligation. |
||
| (K) | Example 11. Notional principal contracts. | ||
| (F) Anti-avoidance rules. |
§1.1502-13(h)(2) | (i) | Example 1. Sale of a partnership interest. |
| (ii) | Example 2. Transitory status as an intercompany obligation. | ||
| (iii) | Example 3. Corporate mixing bowl. |
Bulletin No. 2023–34 591 August 21, 2023
| Rule | General Location | Paragraph | Example |
|---|---|---|---|
| (iv) | Example 4. Partnership mixing bowl. | ||
| (v) | Example 5. Sale and leaseback. | ||
| (vi) | Example 6. Section 163(j) interest limitation. | ||
| (G) Miscellaneous operating rules. |
§1.1502-13(j)(9) | (i) | Example 1. Intercompany sale followed by section 351 transfer to member. |
| (ii) | Example 2. Intercompany sale of member stock followed by recapitalization. |
||
| (iii) | Example 3. Back-to-back intercompany transactions—matching. |
||
| (iv) | Example 4. Back-to-back intercompany transactions—acceleration. |
||
| (v) | Example 5. Successor group. | ||
| (vi) | Example 6. Liquidation—80% distributee. | ||
| (vii) | Example 7. Liquidation—no 80% distributee. |
(c) * * * (5) * * * For other special status issues, see, for example, sections 818(b) (life insurance company treatment of capital gains and losses) and 1503(c) (limitation on absorption of certain losses).
(f) * * * (5) * * * (ii) * * * (F) Applicability date. Paragraphs (f) (5)(ii)(B)( 1 ) and ( 2 ) of this section apply to transactions in which old T’s liquidation into B occurs on or after October 25, 2007. (6) * * * (ii) Gain stock. For dispositions of P stock, see §1.1032-3.
(v) Applicability date. This paragraph (f)(6) applies to gain or loss taken into account on or after July 12, 1995, and to transactions occurring on or after July 12, 1995.
(l) * * * (6) Applicability date regarding para- graph (f)(7)(iv) of this section (Example 4). Paragraph (f)(7)(iv) of this section ( Example 4 ) applies to transactions occurring on or after December 18, 2009.
(7) Election to apply paragraph (f) (5)(ii) of this section to an intercom- pany transaction. Paragraph (f)(5)(ii) (E) of this section applies to any original
consolidated Federal income tax return due (without extensions) after June 14, 2007. (8) Election to reduce basis of parent stock under paragraph (f)(6) of this sec- tion. Paragraph (f)(6)(i)(C)( 2 ) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007.
(9) Certain qualified stock dispositions. Paragraph (f)(5)(ii)(C) of this section applies to any qualified stock disposition (as defined in §1.336-1(b)(6)) for which the disposition date (as defined in §1.3361(b)(8)) is on or after May 15, 2013.
§1.1502-17 [Amended]
Par. 16. Section 1.1502-17 is amended by removing the last sentence of paragraph (a) and the second sentence of paragraph (e).
§1.1502-18 [Removed]
Par. 17. Section 1.1502-18 is removed. Par. 18. Section 1.1502-21 is amended by:
In paragraph (b)(3)(i), removing the fourth sentence and revising the last sentence.
In paragraph (b)(4), removing the fifth sentence and revising the last sentence.
Removing and reserving paragraph (d).
Removing the last three sentences of paragraph (h)(6).
Removing the second sentence of paragraph (h)(8).
The revisions read as follows:
§1.1502-21 Net operating losses.
(b) * * * (3) * * * (i) * * * The election may be made in an unsigned statement.
(ii) * * * (B) * * * The election may be made in an unsigned statement.
§ 1.1502-22 [Amended]
Par. 19. Section 1.1502-22 is amended by removing and reserving paragraph (d).
Par. 20. Section 1.1502-24 is amended by:
- Revising paragraph (a)(2).
- Removing the text “section 242, section 243(a)(2) and (3), § 1.1502-25, § 1.1502-26, and § 1.1502-27,” from paragraph (c) and adding the text “section 243(a)(2) and (3) and §1.1502-26,” in its place.
The revision reads as follows:
§1.1502-24 Consolidated charitable contributions deduction.
(a) * * *
August 21, 2023 592 Bulletin No. 2023–34
(2) The percentage limitation on the total charitable contribution deduction provided in section 170(b)(2)(A) applied to adjusted consolidated income as determined under paragraph (c) of this section.
Par. 21. Section 1.1502-26 is amended by:
Revising paragraph (a).
Designating Examples 1 and 2 in paragraph (c) as paragraphs (c)(1) and (2), respectively.
Revising newly designated paragraphs (c)(1) and (2).
The revisions read as follows:
§1.1502-26 Consolidated dividends received deduction.
(a) In general. The consolidated dividends received deduction for the taxable year is the lesser of—
(1) The aggregate of the deduction of the members of the group allowable under sections 243(a)(1), 245(a) and (b), and 250 (computed without regard to the limitations provided in section 246(b)), or
(2) The aggregate amount described in section 246(b), determined by substituting, wherever it appears—
(i) The term consolidated taxable income for taxable income,
(ii) The term consolidated net operat- ing loss for net operating loss, and
(iii) The term consolidated net capital loss for capital loss .
(c) * * * (1) Example 1. Corporations P, S, and S-1 filed a consolidated return for the calendar year 2023 showing consolidated taxable income of $100,000 (determined without regard to the consolidated net operating loss deduction, and the consolidated dividends received deduction). These corporations received dividends during such year from less than 20-percent owned domestic corporations as follows:
Table 1 to paragraph (c)(1)
| Corporation | Dividends |
|---|---|
| P | $6,000 |
| S | $10,000 |
| S-1 | $34,000 |
| Total | $50,000 |
The dividends received deduction allowable to each member under section 243(a)(1) (computed without regard to the limitation in section 246(b)) is as follows: P has $3,000 (50 percent of $6,000), S has $5,000 (50 percent of $10,000), and S-1 has $17,000 (50 percent of $34,000), or a total of $25,000. Since $25,000 is less than $50,000 (50
percent of $100,000), the consolidated dividends received deduction is $25,000.
(2) Example 2. Assume the same facts as in paragraph (c)(1) of this section ( Example 1 ), except that consolidated taxable income (computed without regard to the consolidated net operating loss deduction and the consolidated dividends received deduction) was $40,000. The aggregate of the dividends received deductions, $42,500, computed without regard to section 246(b), results in a consolidated net operating loss of $2,500. See section 172(d) (5). Therefore, paragraph (a)(2) of this section does not apply and the consolidated dividends received deduction is $42,500.
§1.1502-27 [Removed]
Par. 22. Section 1.1502-27 is removed. Par. 23. Section 1.1502-32 is amended by:
Revising paragraphs (b)(4)(v) and (vii).
In paragraph (b)(5)(ii), designating Examples 1 through 10 as paragraphs (b) (5)(ii)(A) through (J), respectively.
In newly redesignated paragraphs (b)(5)(ii)(A) through (J), further redesignating paragraphs in the first column as paragraphs in the second column:
| Old Paragraphs | New Paragraphs |
|---|---|
| (b)(5)(ii)(A)(a), (b), and (c)………………… | (b)(5)(ii)(A)(1), (2), and (3) |
| (b)(5)(ii)(B)(a), (b), (c), and (d)…………… | (b)(5)(ii)(B)(1), (2), (3), and (4) |
| (b)(5)(ii)(C)(a) and (b)…………………… | (b)(5)(ii)(C)(1) and (2) |
| (b)(5)(ii)(D)(a), (b), (c), and (d)…………… | (b)(5)(ii)(D)(1), (2), (3), and (4) |
| (b)(5)(ii)(E)(a), (b), and (c)……………….. | (b)(5)(ii)(E)(1), (2), and (3) |
| (b)(5)(ii)(F)(i) and (ii)………………………. | (b)(5)(ii)(F)(1) and (2) |
| (b)(5)(ii)(H)(a), (b), and (c)……………….. | (b)(5)(ii)(H)(1), (2), and (3) |
| (b)(5)(ii)(I)(a), (b), and (c)………………… | (b)(5)(ii)(I)(1), (2), and (3) |
| (b)(5)(ii)(J)(a), (b), and (c)………………… | (b)(5)(ii)(J)(1), (2), and (3) |
- Removing the text “is treated as a dividend under section 356(a)(2)” from the last sentence of newly designated paragraph (b)(5)(ii)(F)( 1 ) and adding the text “is treated as received by M in a separate
transaction occurring immediately after the merger of T into S” in its place.
- In paragraph (b)(5), for each newly redesignated paragraph listed in the “Paragraph” column, removing the text
indicated in the “Remove” column and adding in its place the text indicated in the “Add” column:
Bulletin No. 2023–34 593 August 21, 2023
| Paragraph | Remove | Add |
|---|---|---|
| (b)(5)(ii)(A)(2) | paragraph (a) of this_Example 1_ | paragraph (b)(5)(ii)(A)(1) of this section (Example 1) |
| (b)(5)(ii)(A)(3) | paragraph (b) of this_Example 1_ | paragraph (b)(5)(ii)(A)(2) of this section (Example 1) |
| (b)(5)(ii)(B)(2) | paragraph (a) of this_Example 2_ | paragraph (b)(5)(ii)(B)(1) of this section (Example 2) |
| (b)(5)(ii)(B)(3) | paragraph (a) of this_Example 2_ | paragraph (b)(5)(ii)(B)(1) of this section (Example 2) |
| (b)(5)(ii)(B)(4) | paragraph (a) of this_Example 2_ | paragraph (b)(5)(ii)(B)(1) of this section (Example 2) |
| (b)(5)(ii)(D)(3) | paragraph (a) of this_Example 4_ | paragraph (b)(5)(ii)(D)(1) of this section (Example 4) |
| (b)(5)(ii)(E)(2) | paragraph (a) of this_Example 5_ | paragraph (b)(5)(ii)(E)(1) of this section (Example 5) |
| (b)(5)(ii)(E)(3) | paragraph (a) of this_Example 5_ | paragraph (b)(5)(ii)(E)(1) of this section (Example 5) |
| (b)(5)(ii)(H)(2) | paragraph (a) of this_Example 8_ | paragraph (b)(5)(ii)(H)(1) of this section (Example 8) |
| (b)(5)(ii)(I)(3) | paragraph (a) of this_Example 9_ | paragraph (b)(5)(ii)(I)(1) of this section (Example 9) |
Par. 25. Section 1.1502-42 is removed. Par. 26. Section 1.1502-43 is amended by:
Revising paragraphs (b)(2)(iii) through (vi), the last sentence of paragraph (b)(2)(vii), and paragraph (b)(2)(viii).
Removing the last two sentences of paragraph (e).
The revisions read as follows:
§1.1502-43 Consolidated accumulated earnings tax.
(b) * * * (2) * * * (iii) Under section 535(b)(3), the deduction determined under §1.1502-26 is not allowed.
(iv) Under section 535(b)(4), the consolidated net operating loss deduction described in §1.1502-21(a) is not allowed.
(v) Under section 535(b)(5), there is allowed as a deduction the consolidated net capital loss, determined under §1.1502-22(a).
(vi) Under section 535(b)(6), there is allowed as a deduction an amount equal to—
Removing the last sentence of paragraph (h)(2)(i).
Removing paragraph (h)(5)(i).
Redesignating paragraph (h)(5)(ii) as paragraph (h)(5).
Removing the last sentence of paragraphs (h)(6), (h)(7), and (h)(8).
Removing the text “(b)(5)(ii) Example 6 of this section” from paragraph (h)(8) and adding the text “(b)(5)(ii)(F) of this section ( Example 6 )” in its place.
Redesignating paragraph (j) as paragraph (h)(10).
Revising the heading of newly designated paragraph (h)(10).
Removing the last sentence of newly designated paragraph (h)(10).
Removing paragraph (k). The revisions read as follows:
§1.1502-32 Investment adjustments.
(b) * * * (4) * * * (v) Special rule for loss carryovers of a subsidiary acquired in a transaction for which an election under §1.1502-20(i) (2) is made. See paragraph (b)(4)(v) of this section as contained in 26 CFR part 1 revised as of April 1, 2005.
(vii) Special rules for amending waiver of loss carryovers from separate return limitation year relating to the acquisition of a subsidiary in a transaction subject to §1.1502-20. See paragraph (b)(4)(vii) of this section as contained in 26 CFR part 1 revised as of April 1, 2005.
(h) * * *
(10) Election to treat loss carry- over as expiring. - * *
Par. 24. Section 1.1502-34 is revised to read as follows:
§1.1502-34 Special aggregate stock ownership rules.
(a) Determination of stock ownership—(1) Aggregation rule. For purposes of the consolidated return regulations, in determining the stock ownership of a member of a group in another corporation (issuing corporation) for purposes of determining the application of section 165(g)(3)(A), section 332(b)(1), section 351(a), section 732(f), or section 904(f) in a consolidated return year, stock in the issuing corporation owned by all other members of the group is included. For the determination of whether a member of the group is an 80-percent distributee, see section 337(c) (providing that, for purposes of section 337, the determination of whether any corporation is an 80-percent distributee is made without regard to any consolidated return regulation).
(2) Example regarding liquidation of member. The following example illustrates the stock ownership aggregation rule set forth in paragraph (a)(1) of this section.
(i) Facts. P wholly owns A, B, and C, each of which is a member of the P group. A, B, and C each owns 33 1/3 percent of the stock of D. D liquidates in a transaction purported to qualify under section 332. (ii) Analysis. For purposes of determining satisfaction of the 80-percent stock ownership requirement under section 332(b)(1), under the stock ownership aggregation rule set forth in paragraph (a) (1) of this section: A is treated as owning all of the D stock owned by B and C; B is treated as owning all
of the D stock owned by A and C; and C is treated as owning all of the D stock owned by A and B. Therefore, each of A, B, and C is treated as owning 100 percent of the stock of D and thus meeting the 80-percent stock ownership requirement for purposes of section 332. However, none of A, B, or C is treated as an 80-percent distributee for purposes of section 337. See section 337(c). Therefore, section 337(a) does not apply. (b) [Reserved]
§1.1502-42 [Removed]
August 21, 2023 594 Bulletin No. 2023–34
(A) The consolidated capital gain net income for the taxable year (determined under §1.1502-22(a) and without the consolidated net capital loss carryovers and carrybacks to the taxable year), minus
(B) The taxes attributable to such gain. (vii) * * * See §1.1502-22(b). (viii) Section 1.1502-15 does not apply.
Par. 27. Section 1.1502-44 is amended by:
Removing the text “.” from the end of paragraph (b)(1) and adding the text “;” in its place.
Revising paragraphs (b)(2) and (3). The revisions read as follows:
§1.1502-44 Percentage depletion for independent producers and royalty owners.
(b) * * * (2) Any consolidated net operating loss carryback to the consolidated return year under §1.1502-21; and
(3) Any consolidated net capital loss carryback to the consolidated return year under §1.1502-22.
Par. 28. Section 1.1502-45 is added to read as follows:
§1.1502-45 Limitation on losses to amount at risk.
(a) In general —(1) Scope . This section applies to a loss of any subsidiary if the common parent’s stock meets the stock ownership requirement described in section 465(a)(1)(B.
(2) Limitation on use of losses. Except as provided in paragraph (a)(4) of this section, a loss from an activity of a subsidiary during a consolidated return year is includible in the computation of consolidated taxable income (or consolidated net operating loss) and consolidated capital gain net income (or consolidated net capital loss) only to the extent the loss does not exceed the amount that the parent is at risk in the activity at the close of that subsidiary’s taxable year. In addition, the sum of a subsidiary’s losses from all its activities is includible only to the extent that the parent is at risk in the subsidiary at the close of that year. Any excess may not
be taken into account for the consolidated return year but will be treated as a deduction allocable to that activity of the subsidiary in the first succeeding taxable year.
(3) Amount parent is at risk in sub- sidiary’s activity. The amount the parent is at risk in an activity of a subsidiary is the lesser of the amount the parent is at risk in the subsidiary, or the amount the subsidiary is at risk in the activity. These amounts are determined under paragraph (b) of this section and the principles of section 465. See section 465 and the regulations thereunder and the examples in paragraph (e) of this section.
(4) Excluded activities. The limitation on the use of losses in paragraph (a)(2) of this section does not apply to a loss attributable to an activity described in section 465(c)(4). (5) Substance over form. Any transaction or arrangement between members (or between a member and a person that is not a member) which does not cause the parent to be economically at risk in an activity of a subsidiary will be treated in accordance with the substance of the transaction or arrangement notwithstanding any other provision of this section.
(b) Rules for determining amount at risk —(1) Excluded amounts. The amount a parent is at risk in an activity of a subsidiary at the close of the subsidiary’s taxable year does not include any amount that would not be taken into account under section 465 were the subsidiary not a separate corporation. Thus, for example, if the amount a parent is at risk in the activity of a subsidiary is attributable to nonrecourse financing, the amount at risk is not more than the fair market value of the property (other than the subsidiary’s stock or debt or assets) pledged as security.
(2) Guarantees. If a parent guarantees a loan by a person other than a member to a subsidiary, the loan increases the amount the parent is at risk in the activity of the subsidiary.
(c) Application of section 465. This section applies in a manner consistent with the provisions of section 465. Thus, for example, the recapture of losses provided in section 465(e) applies if the amount the parent is at risk in the activity of a subsidiary is reduced below zero.
(d) Other consolidated return provi- sions unaffected. This section limits only
the extent to which losses of a subsidiary may be used in a consolidated return year. This section does not apply for other purposes, such as §§1.1502-32 and 1.1502-19, relating to investment in stock of a subsidiary and excess loss accounts, respectively. Thus, a loss which reduces a subsidiary’s earnings and profits in a consolidated return year, but is disallowed as a deduction for the year by reason of this section, may nonetheless result in a negative adjustment to the basis of an owning member’s stock in the subsidiary or create (or increase) an excess loss account.
(e) Examples. The provisions of this section may be illustrated by the examples in this paragraph (e). In each example, the stock ownership requirement of section 465(a)(1)(B) is met for the stock of the parent (P), and each affiliated group files a consolidated return on a calendar year basis and comprises only the members described.
(1) Example 1. In 2022, P forms S with a contribution of $200 in exchange for all of S’s stock. During the year, S borrows $400 from a commercial lender and P guarantees $100 of the loan. S uses $500 of its funds to acquire a motion picture film. S incurs a loss of $120 for the year with respect to the film. At the close of 2022, the amount P is at risk in S’s activity is $300 ($200 contribution plus $100 guarantee). If S has no gain or loss in 2023, and there are no contributions from or distributions to P, at the close of 2023 P’s amount at risk in S’s activity will be $180.
(2) Example 2. P forms S-1 with a capital contribution of $1 on January 1, 2023. On February 1, 2023. S-1 borrows $100 with full recourse and contributes all $101 to its newly formed subsidiary S-2. S-2 uses the proceeds to explore for natural oil and gas resources. S-2 incurs neither gain nor loss from its explorations during the taxable year. As of December 31, 2023, P is at risk in the exploration activity of S-2 only to the extent of $1.
(f) Applicability date. This section applies to consolidated return years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .
Par. 29. Section 1.1502-47 is amended by:
Italicizing the text “Nonlife insurance company” in the heading of paragraph (b)(2).
Italicizing the text “separate return limitation year” wherever it appears in paragraph (b)(11).
Adding the text “,” after the text “base period” in paragraph (b)(12)(i).
Bulletin No. 2023–34 595 August 21, 2023
Removing the extra space between the text “paragraphs (b)(12)” and the text “(iii) through (vi)” in paragraph (b)(12)(i) (A).
Removing the extra space between the text “paragraphs (b)(12)” and the text “(v) and (vi)” in the first sentence of paragraphs (b)(12)(iii) and (iv).
Removing the text “subdivision (iv)” from the last sentence of paragraph (b)(12)(iv) and adding the text “paragraph (b)(12)(iv)” in its place.
Removing the extra space between the text “1.1502-75” and the text “(d)(2) or (d)(3)” in paragraph (b)(12)(vi).
Removing the extra space between the text “paragraph (b)(12)” and the text “(ii) through (iv)” in paragraph (b)(12) (vi).
Adding a period after the heading in paragraph (b)(14).
Removing the text “subparagraph (b)(12)(v)(B) and (E)” from paragraph (b) (14)(iii) and adding the text “paragraphs (b)(12)(v)(B) and (D)” in its place.
Removing the extra space between the text “351” and the text “(a)” in paragraph (b)(14)(iii).
Removing the text “the result” from paragraph (b)(14)(vi) and adding the text “The result” in its place.
Revising paragraph (c)(2)(ii).
Removing the text “subdivision (ix) of this paragraph (h)(3)” from paragraph (h)(3)(i) and adding the text “paragraph (h)(3)(ix) of this section” in its place.
Removing the text “paragraph (g) (4)” from paragraph (h)(3)(ii) and adding the text “paragraph (g)(3)” in its place.
Designating the first and second sentences of the undesignated paragraph after paragraph (h)(3)(x) as paragraphs (h) (3)(x)(A) and (B), respectively.
Removing the text “(as defined in paragraph (j) of this section)” from newly designated paragraph (h)(3)(x)(B).
Removing the text “paragraph (f)” from paragraph (h)(4) and adding the text “paragraph (h)” in its place.
Removing the text “paragraph (f) (4)(i)” from the first sentence of paragraph (h)(4)(ii)(A) and adding the text “paragraph (h)(4)(i)” in its place.
Removing the text “paragraph (f) (3)(vi)” from the third sentence of paragraph (h)(4)(ii)(A) and adding the text “paragraph (h)(3)(vi)” in its place.
Removing the text “paragraph (f) (3)(x)” from the fifth sentence of paragraph (h)(4)(ii)(A) and adding the text “paragraph (h)(3)(x)” in its place.
Removing the text “paragraph (f) (2)(ii)” from the seventh sentence of paragraph (h)(4)(ii)(A) and adding the text “paragraph (h)(2)(ii)” in its place.
Removing the text “paragraph (f) (4)(ii)” from the first sentence of paragraph (h)(4)(iii) and adding the text “paragraph (h)(4)(ii)” in its place.
Removing the text “paragraph (f) (3)(vi)” from the fourth sentence of paragraph (h)(4)(iii) and adding the text “paragraph (h)(3)(vi)” in its place.
Removing the text “paragraph (f) (3)(ii)” from the fifth sentence of paragraph (h)(4)(iii) and adding the text “paragraph (h)(3)(ii)” in its place.
Italicizing the text “In” in the heading of paragraph (j)(1).
In paragraph (m)(1)(i), removing the text “or”, and adding the text “or any successor form” at the end of the paragraph.
Adding the text “or any successor form,” before the text “whether filed” in paragraphs (m)(1)(iv) and (m)(1)(v).
The revision reads as follows:
§1.1502-47 Consolidated returns by life-nonlife groups.
(c) * * * (2) * * * (ii) Special rule. Notwithstanding the general rule, however, if the nonlife members in the group filed a consolidated return for the immediately preceding taxable year and had executed and filed a Form 1122 (or successor form) that is effective for the preceding year, then such members will be treated as if they filed a Form 1122 (or successor form) when they join in the filing of a consolidated return under section 1504(c)(2) and they will be deemed to consent to the regulations under this section. However, an affiliation schedule (Form 851, or any successor form) must be filed by the group and the life members must execute a Form 1122 (or successor form) in the manner prescribed in §1.1502-75(h)(2).
Par. 30. Section 1.1502-75 is amended by:
Adding the text “(or successor form)” after the text “Form 1122” wherever it appears in paragraph (b)(1).
Adding the text “(or successor form”) after the text “Form 851” in paragraph (b)(2)(iii).
Adding the text “(or successor form)” after the text “Form 1122” wherever it appears in paragraph (b)(3)
Revising the second sentence of paragraph (c)(1)(i).
Removing the text “his” from paragraphs (c)(2)(i) and (ii) and adding the text “the Commissioner’s” in its place.
Removing paragraph (d)(5).
Revising paragraph (h)(1).
Adding the text “, or any successor form,” before the text “must be executed” in the first sentence of paragraph (h)(2), removing the second sentence and revising the third sentence.
Adding the text “(or successor forms)” after the text “Forms 1122” in the fourth sentence of paragraph (h)(2).
Adding the text “(or any successor form)” after the text “Form 1122” in the last sentence of paragraph (h)(2).
The revisions read as follows:
§1.1502-75 Filing of consolidated returns.
(c) * * * (1) * * * (i) * * * Any such application must be made through a letter ruling request filed not later than the 90th day before the due date of the consolidated return for the taxable year (including extensions). * * *
(h) Method of filing returns and forms —(1) Consolidated return made by common parent or agent. The consolidated return must be made on Form 1120, U.S. Corporation Income Tax Return (or any successor form), for the group by the common parent or the agent for the group as provided in §1.1502-77(c). The consolidated return, with Form 851, Affiliations Schedule (or any successor form), attached, must be filed with the service center with which the common parent would have filed a separate return.
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(2) * * * The group must attach either executed Forms 1122 (or successor forms) or unsigned copies of the completed Forms 1122 (or successor forms) to the consolidated return. * * *
Par. 31. Section 1.1502-76 is amended by:
Revising the last sentence of paragraph (a).
Removing the last sentence from paragraphs (b)(1)(ii)(A) (2) and (b)(2)(v).
Revising paragraph (b)(6).
Designating Example 1 and 2 in paragraph (c)(3) as paragraphs (c)(3)(i) and (ii), respectively.
In newly designated paragraph (c)(3) (i), removing the text “June 15” wherever it appears and adding the text “July 15” in its place, and removing the text “March 15” wherever it appears and adding the text “April 15” in its place.
In newly redesignated paragraph (c) (3)(i), removing the text “1966” wherever it appears and adding the text “2022” in its place.
In newly redesignated paragraphs (c) (3)(i), removing the text “1967” wherever it appears and adding the text “2023” in its place.
In newly redesignated paragraphs (c) (3)(i), removing the text “1968” wherever
it appears and adding the text “2024” in its place.
In newly redesignated paragraph (c) (3)(ii), removing the text “June 15” wherever it appears and adding the text “July 15” in its place, and removing the text “March 15” wherever it appears and adding the text “April 15” in its place.
In newly redesignated paragraph (c)(3)(ii), removing the text “1967” wherever it appears and adding the text “2023” in its place.
In newly redesignated paragraph (c)(3)(ii), removing the text “1968” wherever it appears and adding the text “2024” in its place.
Revising paragraph (d). The revisions read as follows:
§1.1502-76 Taxable year of members of group.
(a) * * * Any request for such consent must be requested at the time and in the manner that the Commissioner of Internal Revenue may prescribe by Internal Revenue Service forms and instructions or by publication in the Internal Revenue Bulletin (see §601.601(d)(2)(ii) of this chapter).
(b) * * *
(6) Applicability date. Except as provided in paragraphs (b)(1)(ii)(A)( 2 ) and (b)(2)(v) of this section, this paragraph (b) applies to corporations becoming or ceasing to be members of consolidated groups on or after January 1, 1995.
(d) Applicability date —(1) Taxable years of members of group applicability date. Paragraph (a) of this section applies to any original consolidated Federal income tax return due (without extensions) after July 20, 2007.
(2) Election to ratably allocate items applicability date. Paragraph (b)(2)(ii) (D) of this section applies to any original consolidated Federal income tax return due (without extensions) after July 20, 2007. §1.1502-77 [Amended] Par. 32. Section 1.1502-77 is amended by:
Designating Examples 1 through 15 in paragraph (g) as paragraphs (g)(1) through (15), respectively.
In paragraph (g), for each newly redesignated paragraph listed in the “Paragraph” column, removing the text indicated in the “Remove” column and adding in its place the text indicated in the “Add” column:
| Paragraph | Remove | Add |
|---|---|---|
| (g)(2)(i) | Example 1 | paragraph (g)(1)(i) of this section (Example 1) |
| (g)(4)(i) | Example 3 | paragraph (g)(3)(i) of this section (Example 3) |
| (g)(5)(i) | Example 4 | paragraph (g)(4) of this section (Example 4) |
| (g)(11)(i)(B)(1) | his | the Commissioner’s |
| (g)(11)(ii)(A) | paragraph (i)(A) of this_Example 11_ | paragraph (g)(11)(i)(A) of this section |
| (g)(12)(i) | paragraph (ii)(A) of_Example 11_ | paragraph (g)(11)(ii)(A) of this section (Example 11) |
| (g)(13)(i) | March 15 | April 15 |
§1.1502-77A [Amended]
Par. 33. Section 1.1502-77A is amended by removing the text “he may, if he deems it advisable,” from the last sentence of paragraph (d) and adding the text “the Commissioner may” in its place.
§1.1502-77B [Amended]
Par. 34. Section 1.1502-77B is amended by:
Removing the text “he may, if he deems it advisable,” from the last sentence of paragraph (a)(6)(i) and adding the text “the Commissioner may” in its place.
Removing the text “he” from paragraph (a)(6)(ii) and adding the text “the Commissioner” in its place.
Par. 35. Section 1.1502-78 is amended by revising paragraph (f) to read as follows:
Bulletin No. 2023–34 597 August 21, 2023
§1.1502-78 Tentative carryback adjustments.
§1.1502-80 [Amended]
Par. 37. Section 1.1502-80 is amended by removing the text “on or after September 17, 2008” from paragraph (c) (2).
§1.1502-81T [Removed]
Par. 38. Section 1.1502-81T is removed.
Par. 39. Section 1.1502-90 is amended by revising the entry in the table of contents for §1.1502-99, in numerical order, to read as follows:
§1.1502-90 Table of contents.
(f) Applicability date. This section applies to taxable years to which a loss or credit may be carried back and for which the due date (without extensions) of the original return is after June 28, 2002, except that the provisions of paragraph (e) (2) of this section apply for applications by new members of consolidated groups for tentative carryback adjustments resulting from net operating losses, net capital losses, or unused business credits arising in separate return years of new members that begin on or after January 1, 2001.
Par. 36. Section 1.1502-79 is amended by:
Revising paragraphs (a), (b), and (d).
Removing the text “(or §§ 1.150279A(a)(1) and (2), as appropriate)” from paragraph (e)(1).
Revising paragraph (e)(2). The revisions read as follows:
§1.1502-79 Separate return years.
(a) Carryover and carryback of con- solidated net operating losses to separate return years. For rules regarding the carryover and carryback of consolidated net operating losses to separate return years, see §1.1502-21(b).
(b) Carryover and carryback of con- solidated net capital loss to separate return years. For rules regarding the carryover and carryback of consolidated net capital losses to separate return years, see §1.1502-22(b).
(d) Carryover and carryback of con- solidated unused foreign tax —(1) In gen- eral. If a consolidated unused foreign tax can be carried under the principles of section 904(c) and §1.1502-4(d) to a separate
return year of a corporation (or could have been so carried if such corporation were in existence) that was a member of the group in the year in which the unused foreign tax arose, then the portion of the consolidated unused foreign tax attributable to the corporation (as determined under paragraph (d)(2) of this section) is apportioned to the corporation (and any successor to that corporation in a transaction to which section 381(a) applies) under the principles of §1.1502-21(b) and is deemed paid or accrued in such separate return year to the extent provided in section 904(c).
(2) Portion of consolidated unused for- eign tax attributable to a member. The portion of a consolidated unused foreign tax for any year attributable to a member is an amount equal to the consolidated unused foreign tax multiplied by a fraction. The numerator of the fraction is the foreign taxes paid or accrued by the member for the year (including those taxes deemed paid or accrued, other than by reason of section 904(c)). The denominator of the fraction is the aggregate of all such taxes paid or accrued for the year (including those taxes deemed paid or accrued, other than by reason of section 904(c)) by all members of the group.
(e) * * * (2) Portion of consolidated excess charitable contributions attributable to a member. The portion of the consolidated excess charitable contributions for any year attributable to a member is an amount equal to the consolidated excess contributions multiplied by a fraction. The numerator of the fraction is the charitable contributions paid by the member for the year. The denominator of the fraction is the aggregate of all charitable contributions paid for the year by all members of the group.
§1.1502-99 Effective/applicability dates.
(a) In general. (b) Reattribution of losses under §1.1502-36(d)(6).
(c) Application to section 163(j). (1) Sections 1.382-2 and 1.382-5. (2) Sections 1.382-6 and 1.383-1.
§1.1502-91 [Amended]
Par. 40. Section 1.1502-91 is amended by removing paragraph (b)(3).
§1.1502-92 [Amended]
Par. 41. Section 1.1502-92 is amended by:
Designating Examples 1 through 3 in paragraph (b)(3)(iii) as paragraphs (b)(3) (iii)(A) through (C), respectively.
In newly redesignated paragraphs (b)(3)(iii)(A) through (C), further redesignating paragraphs in the first column as paragraphs in the second column:
| Old Paragraphs | New Paragraphs |
|---|---|
| (b)(3)(iii)(A)(i) and (ii)……………………… | (b)(3)(iii)(A)(1) and (2) |
| (b)(3)(iii)(B)(i), (ii), (iii), and (iv)…………… | (b)(3)(iii)(B)(1), (2), (3), and (4) |
| (b)(3)(iii)(C)(i) and (ii)……………………… | (b)(3)(iii)(C)(1) and (2) |
- Removing the text “his” from newly redesignated paragraph (b)(3)(iii)(B)( 2 ) and adding the text “its” in its place.
Par. 42. Section 1.1502-99 is amended by:
Revising paragraphs (a) and (b).
Removing paragraph (c).
Redesignating paragraph (d) as paragraph (c).
August 21, 2023 598 Bulletin No. 2023–34
The revisions read as follows:
§1.1502-99 Effective/applicability dates.
(a) In general. Sections 1.1502-91 through 1.1502-96 and §1.1502-98 apply to any testing date that is on or after June 25, 1999. Sections 1.1502-94 through 1.1502-96 also apply to a corporation that becomes a member of a group or ceases to be a member of a group (or loss subgroup) on or after June 25, 1999.
(b) Reattribution of losses under §1.1502-36(d)(6). Section 1.1502-96(d) applies to reattributions of net operating loss carryovers, capital loss carryovers, and deferred deductions in connection with a transfer of stock to which §1.150236 applies, and the election under §1.1502-96(d)(5) (relating to an election to reattribute section 382 limitation) can be made with an election under §1.150236(d)(6) to reattribute a loss to the common parent that is filed at the time and in the manner provided in §1.1502-36(e)(5) (x).
Par. 43. Section 1.1502-100 is amended by:
Removing the text “§ 1.1502-1 through § 1.1502-80” from paragraph (a) (2) wherever it appears and adding the text “the consolidated return regulations” in its place.
Removing the text “1.1502-21A or” and the text “(as appropriate)” from paragraph (c)(2).
Revising paragraph (d). The revision reads as follows:
§1.1502-100 Corporations exempt from tax.
(d) Separate unrelated business taxable income —(1) In general. The separate unrelated business taxable income of a member of an exempt group must be computed in accordance with the provisions of section 512 covering the determination of unrelated business taxable income of separate corporations, except that:
(i) The provisions of paragraphs (a) through (d), (f) through (k), and (o) of §1.1502-12 apply; and
(ii) No charitable contributions deduction is taken into account under section 512(b)(10). (2) Section 501(c)(2) organizations. See sections 511(c) and 512(a)(3)(C) for special rules applicable to organizations described in section 501(c)(2).
§§1.1502-9A, 1.1502-15A, 1.1502- 21A, 1.1502-22A, 1.1502-23A, 1.1502-41A, 1.1502-79A, 1.1502-90A, 1.1502-91A, 1.1502-92A, 1.1502-93A, 1.1502-94A, 1.1502-95A, 1.1502-96A, 1.1502-97A, 1.1502-98A, 1.1502-99A, and 1.1503-2 [Removed]
Par. 44. Sections 1.1502-9A, 1.1502-15A, 1.1502-21A, 1.1502-22A, 1.1502-23A, 1.1502-41A, 1.1502-79A, 1.1502-90A, 1.1502-91A, 1.1502-92A, 1.1502-93A, 1.1502-94A, 1.1502-95A, 1.1502-96A, 1.1502-97A, 1.1502-98A, 1.1502-99A, and 1.1503-2 are removed.
§1.1503-2 [Removed]
Par. 45. Section 1.1503-2 is removed.
§1.1503(d)-1 [Amended]
Par. 46. Section 1.1503(d)-1 is amended by removing the text “possession of the United States” from paragraph (b)(7) and adding the text “U.S. territory (as defined in §1.1502-1(l))” in its place.
Par. 47. Section 1.1503(d)-8 is amended by:
Revising the last sentence of paragraph (a).
Removing and reserving paragraphs (b)(1), (b)(2), (b)(3)(ii), (b)(3)(iii), and (b) (4).
The revision reads as follows:
§1.1503(d)-8 Effective dates.
(a) * * * Section 1.1503-2, as contained in 26 CFR part 1, revised as of April 1, 2023, applies for dual consolidated losses incurred in taxable years beginning on or after October 1, 1992, and before the application date.
Par. 48. Section 1.1552-1 is amended by:
Redesignating paragraphs (a)(1)(ii) (a) through (d) as paragraphs (a)(1)(ii)(A) through (D), respectively.
Revising newly redesignated paragraph (a)(1)(ii)(B).
Redesignating paragraphs (a)(2)(ii) (a) through (i) as paragraphs (a)(2)(ii)(A) through (I), respectively.
Removing and reserving newly redesignated paragraph (a)(2)(ii)(B).
Revising paragraph (a)(2)(ii)(I). The revisions read as follows:
§1.1552-1 Earnings and Profits.
(a) * * * (1) * * * (ii) * * * (B) Such member’s capital gain net income (determined without regard to any net capital loss carryover attributable to such member);
(2) * * * (ii) * * * (I) For purposes of subtitle A of the Code, if two or more taxable income brackets are set forth in section 11(b) of the Code, the amount in each taxable income bracket is divided by the number of members (or such portion of each bracket which is apportioned to the member pursuant to a schedule attached to the consolidated return for the consolidated return year). However, if for the taxable year some or all of the members are component members of a controlled group of corporations (within the meaning of section 1563) and if there are other such component members which do not join in filing the consolidated return for such year, the amount to be divided among the members filing the consolidated return is (in lieu of the taxable income brackets) the sum of the amounts apportioned to the component members which join in filing the consolidated return.
§1.1563-1 [Amended]
Par. 49. Section 1.1563-1 is amended by:
- Removing the text “(directly and with the application of § 1.1563-3(b)(1), relating to options)” from paragraph (a) (2) wherever it appears and adding the text “(directly and with the application of § 1.1563-3(b)(1), (2), and (3))” in its place.
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Removing the text “his” from paragraph (a)(6) wherever it appears and adding the text “the shareholder’s” in its place.
In paragraph (b)(4), designating Examples 1 through 4 as paragraphs (b) (4)(i) through (iv), respectively.
Removing the text “he” from the third sentence of newly designated paragraph (b)(4)(i) and adding the text “B” in its place.
§1.1563-2 [Amended]
Par. 50. Section 1.1563-2 is amended by:
Removing the text “his” from each of paragraphs (b)(2)(iii) and (b)(4)(ii), and adding the text “the employee’s” in its place.
In paragraph (b)(7), designating Examples 1 through 3 as paragraphs (b) (7)(i) through (iii), respectively.
In newly designated paragraph (b) (7)(iii), removing the text “he” wherever it appears and adding the text “Davis” in its place; removing the text “his” wherever it appears and adding the text “Davis’s” in its place; and removing the text “wife” from the last sentence and adding the text “spouse” in its place.
§ 1.1563-3 [Amended]
Par. 51. Section 1.1563-3 is amended by:
Removing the text “his” from paragraph (b)(2)(i) and adding the text “the partner’s” in its place.
Removing the text “The provisions of this subparagraph may be illustrated by the following example:” from paragraph (b)(2)(ii).
Removing the text “his” from the fourth sentence of paragraph (b)(2)(ii) and adding the text “Green’s” in its place.
In the sixth sentence of paragraph (b) (2)(ii), removing the text “he” and adding the text “Jones” in its place, and removing the text “his” and adding the text “Jones’s” in its place.
Removing the text “he” from the last sentence of paragraph (b)(2)(ii) and adding the text “White” in its place.
In paragraph (b)(3)(i), removing the text “his” from the second sentence
and adding the text “the beneficiary’s” in its place, and removing the text “he” and “him” from the second-to-last sentence and adding the text “that beneficiary” in its place.
In paragraph (b)(3)(ii), removing the text “his” and adding the text “the decedent’s” in its place, and removing the text “he” and “him” wherever it appears and adding the text “the person” in its place.
Removing the text “The provisions of this subparagraph may be illustrated by the following example:” from paragraph (b)(4)(ii).
In paragraph (b)(4)(ii), removing the text “he” from the fifth sentence and adding the text “Smith” in its place, and removing the text “Smith’s wife” and “his wife” from the last sentence wherever it appears and adding the text “Smith’s spouse” in its place.
Removing the text “his” from paragraphs (b)(5)(i) and (ii) and (b)(6)(i) and (ii) wherever it appears and adding the text “the individual’s” in its place.
Removing the text “The provisions of this subparagraph may be illustrated by the following example:” from paragraph (b)(6)(iv).
Redesignating paragraphs (b)(6) (iv)(a) through (d) as paragraphs (b)(6) (iv)(A) through (D).
In newly redesignated paragraph (b)(6)(iv)(A), removing the text “F” and adding the text “B” in its place, and removing the text “His son” and “his son” and adding the text “B’s child” in its place.
In newly redesignated paragraph (b)(6)(iv)(B), removing the text “F” wherever it appears and adding the text “B” in its place, removing the text “subdivision (ii) of this subparagraph” and adding the text “paragraph (b)(6)(ii) of this section” in its place, removing the text “he” and adding the text “B” in its place, and removing the text “his adult son” and adding the text “B’s adult child” in its place.
In the first sentence of newly redesignated paragraph (b)(6)(iv)(C), removing the text “son” and adding the text “child” in its place, and removing the text “by his father, F” and adding the text “by B” in its place.
In the second sentence of newly redesignated paragraph (b)(6)(iv)(C),
removing the text “his brother” and adding the text “M’s sibling” in its place, removing the text “F” wherever it appears and adding the text “B” in its place, removing the text “him” and adding the text “B” in its place, and removing the text “his” and adding the text “B’s” in its place.
In newly redesignated paragraph (b)(6)(iv)(D), removing the text “son” and adding the text “child” in its place, removing the text “he” wherever it appears and adding the text “A” in its place, and removing the text “his father” and adding the text “B” in its place.
Removing the text “him” from paragraph (c)(2) and adding the text “the individual” in its place.
In paragraph (c)(4), designating Examples 1 through 3 as paragraphs (c)(4) (i) through (iii), respectively.
In newly designated paragraph (c) (4)(ii), removing the text “brother” from the second sentence and adding the text “sibling” in its place, and removing the text “father” from the third sentence and adding the text “parent” in its place.
Removing the text “his son,” from the first sentence of newly designated paragraph (c)(4)(iii).
In paragraph (d)(3), designating Examples 1 through 3 as paragraphs (d) (3)(i) through (iii), respectively.
In newly designated paragraph (d) (3)(i), removing the text “he” from the third sentence and adding the text “Smith” in its place, and removing the text “his stock in corporation Z” from the fifth sentence and adding the text “the corporation Z stock” in its place.
In newly designated paragraph (d) (3)(ii), removing the text “H” wherever it appears and adding the text “A” in its place, and removing the text “W” wherever it appears and adding the text “B” in its place.
Removing the text “wife” from the first sentence of newly designated paragraph (d)(3)(ii) and adding the text “spouse” in its place.
Removing the text “subparagraph (2)(iii) of this paragraph” from the fifth sentence of newly designated paragraph (d)(3)(ii) and adding the text “paragraph (d)(2)(iii) of this section” in its place.
August 21, 2023 600 Bulletin No. 2023–34
PART 5—TEMPORARY INCOME TAX REGULATIONS UNDER THE REVENUE ACT OF 1978
Par. 52. The authority citation for part 5 continues to read as follows:
Authority: 26 U.S.C. 7805.
§5.1502-45 [Removed]
Par. 53. Section 5.1502-45 is removed.
PART 301—PROCEDURE AND ADMINISTRATION
Par. 54. The authority citation for part 301 continues to read in part as follows:
Authority: 26 U.S.C. 7805. * * *
§301.6402-7 [Amended]
Par. 55. Section 301.6402-7 is amended by removing the text “§§ 1.1502-21(b) or 1.1502-21A(b) (as appropriate)” from paragraph (g)(2)(iii) and adding the text “§1.1502-21(b)” in its place.
PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 56. The authority citation for part 602 continues to read as follows:
Authority: 26 U.S.C. 7805.
§602.101 [Amended]
Par. 57. Section 602.101(b) is amended by removing the entries for §§1.15029A, 1.1502-18, 1.1502-76T, 1.1502-95A, 1.1503-2, and 1.1503-2A from the table.
Douglas W. O’Donnell, Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register July 4, 2023, 8:45 a.m., and published in the issue of the Federal Register for July 7, 2023, 88 FR 52057)
Bulletin No. 2023–34 601 August 21, 2023
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