26 C.F.R. § 1.1016-6

Other applicable rules

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(a) Adjustments must always be made to eliminate double deductions or their equivalent. Thus, in the case of the stock of a subsidiary company, the basis thereof must be properly adjusted for the amount of the subsidiary company's losses for the years in which consolidated returns were made.

(b) In determining basis, and adjustments to basis, the principles of estoppel apply, as elsewhere under the Code, and prior internal revenue laws.

Notes of Decisions
Cited in 8 cases, 1961–1993 · leading case: Woods Inv. Co. v. Comm'r, 85 T.C. 274 (Tax Ct. 1985).
Woods Inv. Co. v. Comm'r, 85 T.C. 274 (Tax Ct. 1985). · cites it 10× “Respondent argues, however, that petitioner *279 must further reduce its basis in the subsidiaries' stock for the excess amount of accelerated over straight-line depreciation in order to prevent petitioner from obtaining what respondent perceives to be a "double deduction.”
Wyman-Gordon Co. v. Comm'r, 89 T.C. 207 (Tax Ct. 1987). · cites it 8× “3 12(l)), Congress simultaneously amended section 108 and by those amendments avoided the tax consequences that otherwise would have obtained under an analysis similar to that set forth in Woods Investment Co .”
Levy v. Comm'r, 46 T.C. 531 (Tax Ct. 1966). · cites it 2× “Section 1016(a)(1) of the Code provides that proper adjustment in respect of property shall in all cases be made for losses or other items properly chargeable to capital account. See also sec. 1.1016-6, Income Tax Regs.”
Andrew Crispo Gallery v. Comm'r, 63 T.C.M. 2152 (Tax Ct. 1992). · cites it 2× “Petitioner is required to prove its adjusted basis in the artwork at the time the loss was sustained.”
Willamette Indus. v. Comm'r, 64 T.C.M. 202 (Tax Ct. 1992). · cites it 4× “As in other matters throughout the proceedings, the parties appear to have forgotten that we must resolve the issues in this litigation on the basis of the record developed here, not on the record developed in the earlier cases.”
Associated Tel. & Tel. Co. v. United States, 199 F. Supp. 452 (S.D.N.Y. 1961). “, 26 C.F.R. 1.1016-6, promulgated under Section 1016 of the 1954 Code, 26 U.”
Willamette Indus., Inc. v. Comm'r, 62 T.C.M. 451 (Tax Ct. 1991). · cites it 4× “(a) Adjustments must always be made to eliminate double deductions or their equivalent.”
Shaver v. Comm'r, 66 T.C.M. 1766 (Tax Ct. 1993). · cites it 4× “Between October of 1983 and June of 1984, petitioner claims to have made additional cash loans to Fotostop in the amount of $ 100,000, and petitioner claims that such additional loans increased petitioner's tax basis in the indebtedness of Fotostop, and petitioner accordingly…”
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