The first amount is the sum of the offsetable nonlife consolidated net operating losses under paragraph (h)(2) of this section that may serve in the particular year (determined without this limitation) as a setoff against consolidated LICTI. The second amount is consolidated LICTI (as defined in paragraph (j) of this section) in the particular year reduced by any nonlife consolidated net capital loss that sets off consolidated LICTI in that year.
Separate taxable income (loss) | |
P | $100 |
S | (100) |
I | (100) |
Nonlife consolidated net operating loss | (100) |
Under paragraph (h)(3)(vi) of this section, P's separate income is considered to absorb the loss of S, an eligible member, first and the offsetable nonlife consolidated net operating loss is zero, that is, the consolidated net operating loss ($100) reduced by I's loss ($100). The consolidated net operating loss ($100) may be carried over, but since it is entirely attributable to I (an ineligible member that is not a nonlife insurance company) its use is subject to the restrictions in paragraph (h)(3)(vi) of this section and section 172(a). The result would be the same if the group contained two additional members, S1, an eligible member, and I1, an ineligible member, where S1 had a loss of ($100) and I1 had income of $100.
Table 1 to Paragraph (h)(4)(ii)(A)
[Dollars omitted]
Facts | Offsettable | Limit | Unused Loss | |
(a) | (b) | (c) | (d) | |
1. P | 100 | |||
2. S | (200) | (100) | (65) | |
3. I | (100) | (100) | ||
4. Nonlife Subgroup | (200) | (100) | (100) | (165) |
5. L | 200 | 200 | ||
6. 35% of lower of line 4(c) or 5(c) | 35 | |||
7. Unused offsettable loss | (65) |
P-S | L | |
1. Nonlife consolidated net operating loss | ($100) | |
2. Nonlife consolidated capital loss | (50) | |
3. Consolidated LICTI | $100 | |
4. Life consolidated capital gain net income included in line 3 | 50 | |
5. Offsetable: | ||
(a) 35% of lower of line (1) or line (3)-(4) | (17.5) | |
(b) Line 2 | (50) | |
(c) Total | (67.5) | |
6. Unused losses available to be carried over: | ||
(a) From line 1 (line 1 minus line 5 (a)) | (82.5) | |
(b) From line 2 (line 2 minus line 5 (b)) | 0 |
Accordingly, under paragraph (e) of this section consolidated taxable income is $32.5, that is, line 3 minus line 5(c).
26 C.F.R. §1.1502-47
Secs. 1502 and 7805 of the Internal Revenue Code of 1954 (68A Stat. 637, 917; 26 U.S.C. 1502 , 7805 )
1. For FEDERAL REGISTER citations affecting § 1.1502-47 , see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.fdsys.gov.
2. By T.D. 9927, 85 FR 67988, Oct. 27, 2020, § 1.1502-47 was amended; however, a portion of the amendment could not be incorporated due to inaccurate amendatory instruction.