Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p16
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 16/45)
Character Range: 5947944–5950719

and
 (b) the entity has *membership interests in a second entity that becomes a subsidiary member of the group at that time; and
 (c) in working out the group's *allocable cost amount for the second entity:
 (i) an amount is required to be added (the second 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 second 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 second 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 entity, the *market value of the first entity's membership interests in the second entity is reduced (in a subparagraph (c)(i) case) or increased (in a subparagraph (c)(ii) or (iii) case) by the first entity's interest in the second entity's profit/loss adjustment amount (see subsection (3)).

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

Adjustment to allocation of allocable cost amount for indirect interest in entity with profits/losses
 (4) If:
 (a) an entity becomes a *subsidiary member of the group at the formation time; and
 (b) the entity has *membership interests in a second entity that becomes a subsidiary member of the group at that time; and
 (c) the second entity has, directly or indirectly through one or more interposed entities that become subsidiary members of the group at the formation time, membership interests in a third entity that becomes a subsidiary member of the group at that time; and
 (d) in working out the group's *allocable cost amount for the third entity:
 (i) an amount is required to be added (the third 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 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 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