[Code of Federal Regulations]
[Title 26, Volume 12]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1502-80]

[Page 479-480]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1502-80  Applicability of other provisions of law.

    (a) In general. The Internal Revenue Code, or other law, shall be 
applicable to the group to the extent the regulations do not exclude its 
application. Thus, for example, in a transaction to which section 381(a) 
applies, the acquiring corporation will succeed to the tax attributes 
described in section 381(c). Furthermore, sections 269 and 482 apply for 
any consolidated year. Section 304 applies except as provided in 
paragraph (b) of this section.
    (b) Non-applicability of section 304. Section 304 does not apply to 
any acquisition of stock of a corporation in an intercompany transaction 
or to any intercompany item from such transaction occurring on or after 
July 24, 1991.
    (c) Deferral of section 165. For consolidated return years beginning 
on or after January 1, 1995, stock of a member is not treated as 
worthless under section 165 before the stock is treated as disposed of 
under the principles of Sec. 1.1502-19(c)(1)(iii). See Sec. Sec. 
1.1502-11(c) and 1.1502-35T for additional rules relating to stock loss. 
For further guidance, see Sec. 1.1502-80T(c).
    (d) Non-applicability of section 357(c)--(1) In general. Section 
357(c) does not apply to any transaction to which Sec. 1.1502-13, Sec. 
1.1502-13T, Sec. 1.1502-14, or Sec. 1.1502-14T applies, if it occurs 
in a consolidated return year beginning on or after January 1, 1995. For 
example, P, S, and T are members of a consolidated group, P owns all of 
the stock of S and T with bases of $30 and $20, respectively, S has a 
$30 basis in its assets and $40 of liabilities, and S merges into T in a 
transaction described in section 368(a)(1)(A) (and in section 
368(a)(1)(D)); section 357(c) does not apply to the merger, P's basis in 
T's stock increases to $50 ($30 plus $20), and

[[Page 480]]

T succeeds to S's $30 basis in the assets transferred subject to the $40 
liability. Similarly, if S instead transferred its assets and 
liabilities to a newly formed subsidiary in a transaction to which 
section 351 applies, section 357(c) does not apply and S's basis in the 
subsidiary's stock is a $10 excess loss account. This paragraph (d) does 
not apply to a transaction if the transferor or transferee becomes a 
nonmember as part of the same plan or arrangement. The transferor (or 
transferee) is treated as becoming a nonmember once it is no longer a 
member of a consolidated group that includes the transferee (or 
transferor). For purposes of this paragraph (d), any reference to a 
transferor or transferee includes, as the context may require, a 
reference to a successor or predecessor.
    (2) Prior period transactions. If, in a tax year beginning before 
January 1, 1995, a member's stock with an excess loss account is 
transferred in a transaction to which Sec. 1.1502-13, Sec. 1.1502-13T, 
Sec. 1.1502-14, or Sec. 1.1502-14T applies, paragraph (d)(1) of this 
section applies to the stock transfer to the extent that the income, 
gain, deduction, or loss (if any) is not taken into account in a tax 
year beginning before January 1, 1995. For example, if P, S, and T, are 
members of a consolidated group, T's stock has an excess loss account, 
and P transfers the T stock to S in 1993 in a transaction to which 
section 351 and Sec. 1.1502-13 apply, section 357(c) applies to the 
transfer only to the extent P's gain is taken into account in tax years 
beginning before January 1, 1995.
    (e) Non-applicability of section 163(e)(5). Section 163(e)(5) does 
not apply to any intercompany obligation (within the meaning of Sec. 
1.1502-13(g)) issued in a consolidated return year beginning on or after 
July 12, 1995.
    (f) Non-applicability of section 1031. Section 1031 does not apply 
to any intercompany transaction occurring in consolidated return years 
beginning on or after July 12, 1995.

[T.D. 8402, 57 FR 9385, Mar. 18, 1992, as amended by T.D. 8560, 59 FR 
41703, Aug. 15, 1994; T.D. 8597, 60 FR 36710, July 18, 1995; T.D. 8677, 
61 FR 33325, June 27, 1996; T.D. 8597, 62 FR 12098, Mar. 14, 1997; T.D. 
9048, 68 FR 12291, Mar. 14, 2003; T.D. 9118, 69 FR 12801, Mar. 18, 2004]