Income Tax Regulations — 5907
able by it for the year is deemed not to have been made, (ii) any such income or profits tax that would have been payable by the shareholder affiliate for the year if the shareholder affiliate had no other taxation year and had not been liable for income or profits tax in respect of income or profits of the transparent affiliate is deemed to have been paid for the year, (iii) to the extent that (A) any such income or profits tax that would otherwise have been payable by the shareholder affiliate for the year on behalf of the shareholder affiliate and the transparent affiliate is reduced because of any loss of the shareholder affiliate for the year or any previous taxation year, the amount of such reduction is deemed to have been received by the shareholder affiliate as a refund for the year of the loss of income or profits tax in respect of the loss, and (B) the shareholder affiliate receives, in respect of a loss of the shareholder affiliate for the year or a subsequent taxation year, a refund of income or profits tax otherwise payable for the year by the shareholder affiliate on behalf of the shareholder affiliate and the transparent affiliate, the amount of such refund is deemed to have been received by the shareholder affiliate as a refund for the year of the loss of income or profits tax in respect of the loss, (iv) any such income or profits tax that would have been payable by the transparent affiliate for the year if the transparent affiliate had no other taxation year, had no income or profits other than those that are included in computing the income or profits of the shareholder affiliate under the income tax laws referred to in paragraph (1.091)(c) and had been liable, and no other person had been liable, for income or profits tax in respect of income or profits of the transparent affiliate is, at the end of the year, (A) to the extent that such income or profits tax would otherwise have reduced the net earnings included in the exempt earnings of the transparent affiliate, to be deducted from the exempt surplus or added to the exempt deficit, as the case may be, of the shareholder affiliate, (B) to the extent that such income or profits tax would otherwise have reduced the hybrid surplus or increased the hybrid deficit of the transparent affiliate, (I) to be deducted from the hybrid surplus or added to the hybrid deficit, as the case may be, of the shareholder affiliate, and (II) to be added to the hybrid underlying tax of the shareholder affiliate, and (C) to the extent that such income or profits tax would otherwise have reduced the net earnings included in the taxable earnings of the transparent affiliate, (I) to be deducted from the taxable surplus or added to the taxable deficit, as the case may be, of the shareholder affiliate, and (II) to be added to the underlying foreign tax of the shareholder affiliate, and (v) to the extent that the income or profits tax that would otherwise have been payable by the shareholder affiliate for the year on behalf of the shareholder affiliate and the transparent affiliate is reduced because of a loss of the transparent affiliate for the year or a previous taxation year, or to the extent that the shareholder affiliate receives, in respect of a loss of the transparent affiliate for the year or a subsequent taxation year, a refund of income or profits tax otherwise payable for the year by the shareholder affiliate on behalf of the shareholder affiliate and the transparent affiliate, the amount of such reduction or refund, as the case may be, is, at the end of the year of the loss, (A) to the extent that such loss reduces the exempt surplus or increases the exempt deficit of the transparent affiliate, to be added to the exempt surplus or deducted from the exempt deficit, as the case may be, of the shareholder affiliate, (B) to the extent that such loss reduces the hybrid surplus or increases the hybrid deficit of the transparent affiliate, (I) to be added to the hybrid surplus or