COD in insolvent member of affiliated group does not affect tax attributes of other members

In affiliated groups, the tax attributes of one member may affect the tax liabilities of the affiliated group. A loss suffered by one member may be used to offset taxable income earned by another. If an insolvent member of an affiliated group has cancellation of debt (COD) income and another member...

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Bibliographic Details
Published inThe Tax Adviser Vol. 26; no. 8; p. 491
Main Author Price, Richard G
Format Trade Publication Article
LanguageEnglish
Published New York American Institute of Certified Public Accountants 01.08.1995
Subjects
Affiliates
Bankruptcy
Carryforward
Debt
Debt cancellation
Depreciable assets
Insolvency
Internal Revenue Code
Letter rulings
Liability
Losses
Ltr. Rul. 9121017
Net operating losses
Right of set off
Section 108
Solvents
Taxable income
Taxation
United States > US
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Summary:In affiliated groups, the tax attributes of one member may affect the tax liabilities of the affiliated group. A loss suffered by one member may be used to offset taxable income earned by another. If an insolvent member of an affiliated group has cancellation of debt (COD) income and another member has an net operating loss (NOL) carryforward, there is a question of whether the other member's NOL carryforward should be reduced. In Letter Ruling 9121017, the IRS held that if the affiliated group is considered a single entity for Section 108, then the other member's NOL carryforward should be reduced. If the affiliated group is treated as an aggregation of separate entities for Section 108, the other member's NOL carryforward should not be reduced.
ISSN:0039-9957