(a) Determination of stock ownership. 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), 332(b)(1), 351(a), 732(f), or 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).
(b) Example regarding liquidation of member. The following example illustrates the stock ownership aggregation rule set forth in paragraph (a) of this section.
(1) 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.
(2) 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) 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.
[T.D. 10018, 89 FR 106871, Dec. 30, 2024]
Notes of Decisions
Henry C. Beck Builders, Inc. v. Comm'r, 41 T.C. 616 (Tax Ct. 1964).
· cites it 30× “The losses of which Homes could not have availed itself during the consolidated period (taxable years 1953 through 1957), had it then been filing separate returns, but which losses Management used to offset its gains, totaled (according to respondent) $ 42,731.”
First Chicago Corp. v. Comm'r, 96 T.C. 421 (Tax Ct. 1991).
· cites it 22× “1502-80, in determining the stock ownership of a member of the group in another corporation *46 (the "issuing corporation") for purposes of determining the application of section 165(g)(3)(A), 332(b)(1), 333(b), 351(a), or 904(f), in a consolidated return year, there shall be…”
Wyman-Gordon Co. v. Comm'r, 89 T.C. 207 (Tax Ct. 1987).
· cites it 4× “, provides that "adjustments [to basis] must always be made to eliminate double deductions or their equivalent." 14 In the context of an issue under that regulation and under section 1.”
Foster v. Comm'r, 25 T.C.M. 1390 (Tax Ct. 1966).
· cites it 10× “1502-37 both require that the basis for determining gain or loss on the disposition of stock of an affiliated member of a consolidated group which makes or is required to make a consolidated return shall be adjusted in accordance with section 1.”
Ambac Indus., Inc. v. Comm'r, 59 T.C. 670 (Tax Ct. 1973).
· cites it 2× “For the purpose of determining the parent corporation's adjusted basis in the preferred stock of its subsidiary under section 1.”
Malone & Hyde, Inc., 64 T.C.M. 1309 (Tax Ct. 1992).
· cites it 2× “In June of 1986, MHTN adopted a plan of complete liquidation under section 332 and section 1.”
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