Opinion ID: 2967422
Heading Depth: 4
Heading Rank: 1

Heading: Years to which loss may be carried. --

Text: (A) Except as provided in subparagraphs . . . (I), .. ., a net operating loss for any taxable year shall be a net operating loss carryback to each of the 3 taxable [years preceding] the taxable year of such loss. ... (I) Product liability losses. -- In the case of a taxpayer which has a product liability loss (as defined in subsection (j)[)] for a taxable year beginning after September 30, 1979 (referred to in this subparagraph as the loss year), the product liability loss shall be a net operating loss carryback to each of the 10 taxable years [preceding] the loss year. 26 U.S.C. § 172(b). 6 tion be calculated separately for each group member, similar to calculations that would be necessary had that member filed its own individual tax return. The separate taxable income for a group member is calculated in accordance with the tax code provisions covering the determinations of taxable income of separate corporations, subject to modifications. See Treas. Reg. § 1.1502-12 (defining separate taxable income).8 8 One such modification, for example, is that no net operating loss deduction may be taken into account when computing a group member's separate taxable income. See id. Thus, pursuant to the consolidated returns regulations, some important and relevant tax return information from the group members is not included in these per-group-member calculations. Instead, that tax return information is separately designated and utilized in consolidated form. These consolidated amounts and the per-group-member amounts are then combined into the parent corporation's consolidated taxable income, which accumulates all the relevant information by taking into account: (i) the separate taxable income of each member of the group; and (ii) deductions attributable to seven different consolidated amounts, e.g., any consolidated net operating loss deduction, and any consolidated charitable contributions deduction. See Treas. Reg. § 1.1502-11(a) (generally defining consolidated taxable income).9 9 _________________________________________________________________ 8 The separate taxable income of a group member excludes deductions that are attributable to certain consolidated amounts, as specified in Treas. Reg. § 1.1502-12 subsections: (h) (net operating loss); (j) (capital gains or losses); (k) (gains or losses subject to section 1231); (l) (section 170 charitable contributions); (m) (section 922 (relating to the deduction for Western Hemisphere trade corporations)); and (n) (dividends received and dividends paid, pursuant to sections 243(a)(1), 244(a), 245, or 247). See Treas. Reg. § 1.1502-12. 9 The consolidated taxable income for a consolidated tax return is determined pursuant to Treas. Reg. § 1.1502-11(a), by taking into account: 7