Treasury Regulations (26 C.F.R.)
26 CFR § 1.1312-6
Correlative deductions and credits for certain related corporations.
# (a)
Paragraph (6) of section 1312 applies if the determination allows or disallows a deduction (including a credit) to a corporation, and if a correlative deduction or credit has been erroneously allowed, omitted, or disallowed in respect of a related taxpayer described in section 1313(c)(7).
# (b)
The application of paragraph (a) of this section may be illustrated by the following examples:
Example 1.
X Corporation is a wholly-owned subsidiary of Y Corporation. In 1955, X Corporation paid $5,000 to Y Corporation and claimed an interest deduction for this amount in its return for 1955. Y Corporation included this amount in its gross income for 1955. In 1958, the Commissioner asserted a deficiency against X Corporation for 1955, contending that the deduction for interest paid should be disallowed on the ground that the payment was in reality the payment of a dividend to Y Corporation. X Corporation contested the deficiency, and ultimately in June 1959, a final decision of the Tax Court sustained the Commissioner. Since the amount of the payment is a dividend, Y Corporation should have been allowed for 1955 the corporate dividends-received deduction under section 243 with respect to such payment. However, the Tax Court's decision sustaining the deficiency against X Corporation occurred after the expiration of the period for filing claim for refund by Y Corporation for 1955. An adjustment is authorized with respect to Y Corporation for 1955.
Example 2.
Assume the same facts as in example (1) except that, instead of the Commissioner asserting a deficiency against X Corporation for 1955, Y Corporation filed a claim for refund in 1958, alleging that the payment received in 1955 from X Corporation was in reality a dividend to which the corporate dividends-received deduction (section 243) applies. The Commissioner denied the claim, and ultimately in June 1959, the district court, in a final decision, sustained Y Corporation. Since the amount of the payment is a dividend, X Corporation should not have been allowed an interest deduction for the amount paid to Y Corporation. However, the district court's decision sustaining the claim for refund occurred after the expiration of the period of limitations for assessing a deficiency against X Corporation for the year 1955. An adjustment is authorized with respect to X Corporation's tax for 1955.
[T.D. 6617, 27 FR 10823, Nov. 7, 1962]
Source: view the official text
In this part (40 sections)
- 1.1297-3 · Deemed sale or deemed dividend election by a U.S. person…
- 1.1297-4 · Qualifying insurance corporation.
- 1.1297-5 · [Reserved]
- 1.1297-6 · Exception from the definition of passive income for active…
- 1.1298-0 · Passive foreign investment company—table of contents.
- 1.1298-1 · Section 1298(f) annual reporting requirements for United…
- 1.1298-2 · Rules for certain corporations changing businesses.
- 1.1298-3 · Deemed sale or deemed dividend election by a U.S. person…
- 1.1298-4 · Rules for certain foreign corporations owning stock in…
- 1.1301-1 · Averaging of farm and fishing income.
- 1.1311(a)-1 · (a)-1 Introduction.
- 1.1311(a)-2 · (a)-2 Purpose and scope of section 1311.
- 1.1311(b)-1 · (b)-1 Maintenance of an inconsistent position.
- 1.1311(b)-2 · (b)-2 Correction not barred at time of erroneous action.
- 1.1311(b)-3 · (b)-3 Existence of relationship in case of adjustment by…
- 1.1312-1 · Double inclusion of an item of gross income.
- 1.1312-2 · Double allowance of a deduction or credit.
- 1.1312-3 · Double exclusion of an item of gross income.
- 1.1312-4 · Double disallowance of a deduction or credit.
- 1.1312-5 · Correlative deductions and inclusions for trusts or estates…
- 1.1312-6 · Correlative deductions and credits for certain related…
- 1.1312-7 · Basis of property after erroneous treatment of a prior…
- 1.1312-8 · Law applicable in determination of error.
- 1.1313(a)-1 · (a)-1 Decision by Tax Court or other court as a…
- 1.1313(a)-2 · (a)-2 Closing agreement as a determination.
- 1.1313(a)-3 · (a)-3 Final disposition of claim for refund as a…
- 1.1313(a)-4 · (a)-4 Agreement pursuant to section 1313(a)(4) as a…
- 1.1313(c)-1 · (c)-1 Related taxpayer.
- 1.1314(a)-1 · (a)-1 Ascertainment of amount of adjustment in year of…
- 1.1314(a)-2 · (a)-2 Adjustment to other barred taxable years.
- 1.1314(b)-1 · (b)-1 Method of adjustment.
- 1.1314(c)-1 · (c)-1 Adjustment unaffected by other items.
- 1.1321-1 · Involuntary liquidation of lifo inventories.
- 1.1321-2 · Liquidation and replacement of lifo inventories by acquiring…
- 1.1331-1 · Recoveries in respect of war losses.
- 1.1332-1 · Inclusion in gross income of war loss recoveries.
- 1.1333-1 · Tax adjustment measured by prior benefits.
- 1.1334-1 · Restoration of value of investments.
- 1.1335-1 · Elective method; time and manner of making election and…
- 1.1336-1 · Basis of recovered property.