(a) General rule.--Pursuant to regulations prescribed by the Secretary the earnings and profits of
each member of an affiliated group required to be included in a consolidated return
for such group filed for a taxable year shall be determined by allocating the tax
liability of the group for such year among the members of the group in accord with
whichever of the following methods the group shall elect in its first consolidated
return filed for such a taxable year:
(1) The tax liability shall be apportioned among the members of the group in accordance
with the ratio which that portion of the consolidated taxable income attributable
to each member of the group having taxable income bears to the consolidated taxable
(2) The tax liability of the group shall be allocated to the several members of the group
on the basis of the percentage of the total tax which the tax of such member if computed
on a separate return would bear to the total amount of the taxes for all members of
the group so computed.
(3) The tax liability of the group (excluding the tax increases arising from the consolidation)
shall be allocated on the basis of the contribution of each member of the group to
the consolidated taxable income of the group. Any tax increases arising from the consolidation shall be distributed to the several
members in direct proportion to the reduction in tax liability resulting to such members
from the filing of the consolidated return as measured by the difference between their
tax liabilities determined on a separate return basis and their tax liabilities based
on their contributions to the consolidated taxable income.
(4) The tax liability of the group shall be allocated in accord with any other method
selected by the group with the approval of the Secretary.
(b) Failure to elect.--If no election is made in such first return, the tax liability shall be allocated
among the several members of the group pursuant to the method prescribed in subsection
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
Was this helpful?
Welcome to FindLaw's Cases & Codes
A free source of state and federal court opinions, state laws, and the United States Code. For more information about the legal concepts addressed by these cases and statutes, visit FindLaw's Learn About the Law.