Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p27
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 27/45)
Character Range: 5975989–5978863

in the table in section 705‑60 (about losses accruing before becoming a subsidiary member of the group); or
 (iii) an amount is required to be subtracted (also the second linked entity's profit/loss adjustment amount) under step 5A in the table in section 705‑60 (about *FRT disallowed amounts accruing to a joined group before the joining time);
then, for the purposes of working out under section 705‑35 the *tax cost setting amount for the assets of the first linked entity, the *market value of the first linked entity's membership interests in the second linked entity is reduced (in a subparagraph (b)(i) case) or increased (in a subparagraph (b)(ii) or (iii) case) by the first linked entity's interest in the second linked entity's profit/loss adjustment amount (see subsection (3)).

First linked entity's interest in second linked entity's profit/loss adjustment amount
 (3) The first linked entity's interest in the second linked entity's profit/loss adjustment amount is worked out using the formula:

Adjustment to allocation of allocable cost amount for indirect interest in linked entity with profits/losses
 (4) If:
 (a) a linked entity has *membership interests in a second linked entity; and
 (b) the second linked entity has, directly or indirectly through one or more interposed linked entities, membership interests in a third linked entity; and
 (c) in working out the group's *allocable cost amount for the third linked entity:
 (i) an amount is required to be added (the third linked entity's profit/loss adjustment amount) under step 3 in the table in section 705‑60 (about profits accruing before becoming a subsidiary member of the group); or
 (ii) an amount is required to be subtracted (also the third linked entity's profit/loss adjustment amount) under step 5 in the table in section 705‑60 (about losses accruing before becoming a subsidiary member of the group); or
 (iii) an amount is required to be subtracted (also the third linked entity's profit/loss adjustment amount) under step 5A in the table in section 705‑60 (about *FRT disallowed amounts accruing to a joined group before the joining time);
then, for the purposes of working out under section 705‑35 the *tax cost setting amount for the assets of the first linked entity, the *market value of the first linked entity's membership interests in the second linked entity is reduced (in a subparagraph (c)(i) case) or increased (in a subparagraph (c)(ii) or (iii) case) by the first linked entity's interest in the third linked entity's profit/loss adjustment amount (see subsection (5)).

First linked entity's interest in third linked entity's profit/loss adjustment amount
 (5) The first linked entity's interest in the third linked entity's profit/loss adjustment amount is worked out using the formula:
where:
market value of first linked entity's membership interests in third