united dominion preserves the vitality of prudential lines which has been second circuit law for twenty five years and is consistent with the only regulations in place in one nine hundred ninety eight that addressed the application section one zero eight to consolidated groups those regulations were the same ones in effect when prudential wines was decided the tax court read united dominion to declare that no part of the consolidated not praying a regulation in ninety eight yes or on the next court specifically said the consolidated group member cannot have a separate well for college consolidated return your alas a specific consolidated return regulation allocates or portions part of the  secretary your honor the supreme court was dealing with a calculation issue not with the action and if your she just suggest that there were regulations in existence at the time and if those regulations were dominion was whether there was a regulation that prohibited the calculation of the net operating loss at the number level the in the reasoning of the of of united dominions spring court said  the internal revenue code and applies a dent to claim to every corporation whether they file a consolidated return or a separate return then secondly you look at the code you say does the code itself modify the way rules and we see whether they changed the normal rules under the code and in that case they were dealing with an operating losses the code requires a net operating loss to be computed going to individual corporate leve the supreme court saw dash eleven fifteen o two desha level of the regulations and it said that regulation pre amps the normal rules the government was arguing that because there isn't a portion you can calculate it at the member same the question of whether you can apportion a part of the c n n well as prevention wives says you do and becomes an ass on the bankruptcy estate is a different question than how you calculate it and the supreme court said there is a specific regulation that prohibits the calculation of the number level it's the regulations in unsexual away do not address they do not change the way sexual want to wait applies congress in an acting sexual in a way so it's a fresh start you get a fresh start one of two to one of either of two ways either there's a deferral or there's a complete exclusion and in fact the way the sexual works is is both for an individual corporation and when you get to the regulations in one thousand nine hundred eight the regulations do not change the way section one the weight applies so there is no windfall was completely anticipated by congress and and it and and what the the treasury did not modify that rule until two thousand and three when the issue proposed in temporary regulations that were docked in this final regulations in two thousand further treasury itself the federal register mentioned that prudential lines was good law now if if if united dominion over ruled prudential wants then they would have said so and in fact in two thousand and three the when the regulations were issued the approach that they adopted they specifically addressed the approach that the tax court eventually later adopted in senate was inconsistent with the legislative delegation of authority the legislative delegation of authority in section fifteen zero two two the treasury gives a very broad authority but it is framed in terms of reflecting clearly the tax liability of the consolidated group and of each member in the group and in and in two thousand and three treasury said you couldn't simply reduce the scieno well which is the position the tax court took here and the position the government argues for can do it consistent with the delegation of legislative authority so the the marvel we believe actually supports our position and and the united dominion continues to be a good law if you start with a default rule that the court applies demichelis to everybody and then you look to see if the cog in our case changes that it doesn't and then you look to the regulations and say do the attributable to that member and and that's what is reduced by the bison under section one away so we know that number is the tax payer we know that them consolidated group is not the tax payer we know that the consolidated group has a scieno well it's a tax attribute of the group not a member and consequently either there is nothing to reduce because the number corporation has no sno well or the member corporation has the portion with a portion to it that's reduced and then other tax attributes the tax payer reduce the government's position here the tax court's position below is contrary to that it contradicts morning near court temperature snyder for the commissioner of internal revenue for marshall to win this case it would be necessary for the supreme court to have decided knighted to minion the opposite way under united only loss that's available for the marvel group to reduce is the entire consolidated net operating loss without apportionment the tax court's decision in this case is therefore car act  counsel for marvel mentioned that the member is the taxpayer of the fallen in groups not the taxpayer but the issue in this case is not who is the tax payer but instead what is the taxpayers net operating loss and to see that marvel's tax payer argument is wrong all we need to do is consider the statute that was it issuing united to minyan itself that statute also applied to a taxpayer it provided a ten year carry back in the case of a tax payer which has a product liability loss and we've cited that on it for thirty three of our answering brief and in fact in its merits brief from the supreme court the government neither the same taxpayer are using that marvel is making here basically saying that army took the opposite position all right the party's positions were essentially reversed and one of the things that the government said as well because the statute applie to a tax payer the separate approach was correct and the supreme court necessarily rejected that argument government lost and the supreme court held that the scieno well could not be  apportioned and the supreme court explained that the reason for that is that the regulations for consolidated groups provided only one definition of n o l consolidated and oh well so it was even fair to they don't get the full benefit of this fresh turn idea of discharge some of the debt is not right well they do because every member of the consolidated group has access to the entire consolidated net operating mean access to the everything the way consolidated returns work is that every member of a consolidated group can use the entire consolidated net operating loss to offset its income so actually under it over one hundred sixty million dollars of cod income and the group allocated to it only eighty two million dollars of the scieno well so instead of reducing all of the cod income which is what the statu requires want to a p says attributes shall be reduced by one dollar for each dollar screwed it instead of doing that marvel only reduce that one sixty five eighty two so actually the government's position is how the statutes post operate and as the court was discussing earlier with marvelous counsel the the way the statutes post work is that the consolidat group got the benefit of the four members excluding the one hundred seventy one million dollars of cod income that required the group to report less on its consolidated return then marvel limited the amount of production required by apportioning separate losses but then it like all consolidated groups carried the scieno well forward for the benefit of the entire gro this whole case right well that's the way consolidated returns work because the ability to share losses is in fact a principal advantage of filing a consolidated return because separate companies don't get to offset their income against somebody else's lawsuits so the principle advantage of filing consolidated returns is that in fact they could do this a member that had income could use losses from any other member essentially offset that income so that's the way consolidated returns work and in fact the supreme court said in united dominion is consistent with those principles there is only one definition of net operating loss and that's consolidated net operating l absent expressly applicable regulatory authority and marbled claims that there are two examples in the investment basis adjustment rules that provided it was that authority but marvel is wrong to rely on those examples for two reasons first as marvel conceded in its opening brief those examples illustrated of our consolidated return and what the supreme court said in united to minyan is that it's wrong to take a regulation that don't list rated another consolidated return rule in that case it was the fifteen zero to that seventy nine regulation it's wrong to take a regulation from one context and consolidated returns and put it in another context the second reason oh and in fact the regulations those examples in the introductory paragraphs the examples actually say the facts that force of the only corporate activity and that language appears  won and twenty nine of the agendum to marvel's opening brief what that means is that we can't assume other facts for it we can't assume that there were other subsidiaries that had attributes that did not get reduce the second reason that marvel's wrongful on those examples is that they predated united to million and they were changed afterwards so to the extent the investment thesis examples might have assumed some kind of in the background neither party can rely on them now we're guarding prudential lines that doesn't support marvel's case for again two reasons this court based its decision on credential loans on the fact that the subsidiary was leaving the group the court stated an opinion that confirmation of the reorganization plan will cost p l eyes departure from the group so as a result there was a regulation on point in prevention lines the court cited the dash seventy nine regulation for the proposition that a ponzi consolidation any remaining n o l would be available to offset the subsidiaries income on its separate tax returns that is the same regulation that the supreme court said in united two million does not apply to consolidated return years like the years at issue here  reason that prudential lines is off point is that it was decided ten years before united to meet so that even if it were true that the two cases were inconsistent then expenses here the question was whether separate and o wells to be apportioned compare with c o d income and under united dominion the scieno wealth cannot be apportioned without expressly applicable regulatory authority which marvel did not have in this case and in fact nowhere in this litigation has more holes identified what regulation it actually used to perform the fortune in other words also just consolidated net operating loss so that regulation as interpreted by the supreme court supports the commissioner's position not marvel's position in this case i see the amount of time to support a further question the they could they could require a taxpayer to calculate in an oh well at the member level when the regulations over rule the code that said that was the normal way you did it in this case there is no regulation over ruling the way section one away it is applied to member corporations that's that's the government has it backwards or maybe that's john's situation where subsidiary was leaving the gro the the the the question the they have it backwards you don't need a permissive regulation the code tells you what to do if there's a regulation that changes the its tax attributes not the tax attributes of the group and and the the the new code if there is no regulation that changes that and there is none in one thousand nine hundred eight then the code is what applies that's the tax law and that's the principle of the consolidated return regulations and that's the reasoning that the supreme court used in united dominion they said very the regulation that