26 C.F.R. § 1.1502-2

Computation of tax liability

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(a) Taxes imposed. The tax liability of a group for a consolidated return year is determined by adding together—

(1) The tax imposed by section 11(a) in the amount described in section 11(b) on the consolidated taxable income for the year (reduced by the taxable income of a member described in paragraphs (a)(5) through (8) of this section);

(2) The tax imposed by section 541 on the consolidated undistributed personal holding company income;

(3) If paragraph (a)(2) of this section does not apply, the aggregate of the taxes imposed by section 541 on the separate undistributed personal holding company income of the members which are personal holding companies;

(4) If neither paragraph (a)(2) nor (3) of this section apply, the tax imposed by section 531 on the consolidated accumulated taxable income (see § 1.1502-43);

(5) The tax imposed by section 594(a) in lieu of the taxes imposed by section 11 on the taxable income of a life insurance department of the common parent of a group which is a mutual savings bank;

(6) The tax imposed by section 801 on consolidated life insurance company taxable income;

(7) The tax imposed by section 831(a) on consolidated insurance company taxable income of the members which are subject to such tax;

(8) Any increase in tax described in section 1351(d)(1) (relating to recoveries of foreign expropriation losses); and

(9) The tax imposed by section 59A on base erosion payments of taxpayers with substantial gross receipts.

(b) Credits. A group is allowed as a credit against the taxes described in paragraph (a) of this section (except for paragraph (a)(9) of this section) of this section: The general business credit under section 38 (see § 1.1502-3), the foreign tax credit under section 27 (see § 1.1502-4), and any other applicable credits provided under the Internal Revenue Code. Any increase in tax due to the recapture of a tax credit will be taken into account. See section 59A and the regulations thereunder for credits allowed against the tax described in paragraph (a)(9) of this section.

(c) Allocation of dollar amounts. For purposes of this section, if a member or members of the consolidated group are also members of a controlled group that includes corporations that are not members of the consolidated group, any dollar amount described in any section of the Internal Revenue Code is apportioned among all members of the controlled group in accordance with the provisions of the applicable section and the regulations thereunder.

(d) Applicability date—This section applies to taxable years for which the original consolidated Federal income tax return is due (without extension) after December 6, 2019.

[T.D. 9885, 84 FR 67038, Dec. 6, 2019]

Notes of Decisions

Cited in 10 cases, 1966–2016 · leading case: Norwest Corp. v. Comm'r, 111 T.C. 105 (Tax Ct. 1998).

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Norwest Corp. v. Comm'r, 111 T.C. 105 (Tax Ct. 1998). · cites it 8× “, provides that the tax liability of an affiliated group of corporations is determined by adding together the taxes imposed under various sections of chapter one of subtitle A of the Code on the group's consolidated taxable income for the taxable year; the total of the taxes so…”

Gottesman & Co. v. Comm'r, 77 T.C. 1149 (Tax Ct. 1981). · cites it 8× “, has contained the phrase "consolidated accumulated taxable income," and that a reasonable person would have concluded that the plain meaning of these terms mandated a consolidated, not separate, calculation in the years at issue.”

First Chicago Corp. v. Comm'r, 96 T.C. 421 (Tax Ct. 1991). · cites it 2× “1502-2, Income Tax Regs. , without regard to the tax surcharge imposed by sec.”

First Nat'l Bank v. Comm'r, 83 T.C. 202 (Tax Ct. 1984). · cites it 2× “The regulations under section 1502 provide that the corporate income tax of section 11 is imposed on the "consolidated taxable income" of the group. Sec. 1.1502-2(a), Income Tax Regs.”

Stanziale v. CopperCom, Inc. (In re Conex Holdings, LLC), 518 B.R. 792 (Bankr. D. Del. 2014). “Id. The NOL had value only to the extent that the subsidiary could use it to offset future income or bargain with other members of the affiliated group for its use.”

State Farm Mut. Auto. Ins. Co. v. Comm'r, 130 T.C. 263 (Tax Ct. 2008). · cites it 2× “Consolidated Returns Generally, consolidated groups calculate a single amount of taxable income (consolidated taxable income or CTI) and *28 a single amount of tax liability. Secs. 1.1502-2 , 1.”

S. California Sav. & Loan Ass'n v. Comm'r, 95 T.C. 35 (Tax Ct. 1990). · cites it 2× “, without regard to the tax surcharge imposed by sec. 51, the minimum tax imposed by sec.”

United States v. ConocoPhillips Co., 744 F.3d 1199 (10th Cir. 2014). · cites it 2× “1967); see 26 C.F.R. § 1.1502-2 (1988) (“Computation of tax liability”).”

Foster v. Comm'r, 25 T.C.M. 1390 (Tax Ct. 1966). · cites it 4× “*95 The first problem therefore is whether the distributions made by Ord and Highland Park to Honolulu in the fiscal year 1956 constituted dividends. Respondent's consolidated regulations, section 1.”

Makric Enters. v. Comm'r, 2016 T.C. Memo. 44 (Tax Ct. 2016). · cites it 2× “A parent company and its wholly-owned subsidiary are permitted to file a consolidated return reporting their consolidated income for the taxable year.”

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