SEC. 5. EFFECTS OF ELECTING

TO DISCONTINUE

.01 In General .

Except as provided in this section 5, each former member of an electing consolidated group must file separate returns during the 60-month period.

.02 Ability to Join Consolidated Return .

(1) If, during the 60-month period, a former member becomes a member of a new group, the former member may not join in any consolidated return filed by the new group during the 60-month period unless the Service permits, or requires, the former member to join. See sections 5.03 and 5.04 below. Further, if the new group is permitted, or required, to file consolidated returns during the 60-month period without the former member, for purposes of applying the consolidated return regulations, the former member must be treated as not being an includible corporation.

(2) If the former member is the common parent of the new group, the new group must treat the former member as an includible corporation. Because the former member generally may not join in the filing of a consolidated return during the 60month period, the new group may not file consolidated returns during the 60month period unless the Service permits, or requires, the former member to join.

(3) If the former member is a subsidiary of the new group, the former member must be treated as not being an includible corporation during the 60month period (unless the Service permits, or requires, the former member to be treated as an includible corporation) for purposes of determining whether the common parent of the new group may file consolidated returns with any other member(s) of the new group. For

26 CFR 601.201: Rulings and determination letters (Also Part I, Section 846; 1.846–1.)

Rev. Proc. 95–40