Final Regs Issued On Deferred Losses And Controlled Groups

The IRS has issued final regulations (TD 9583) that deal with rules for deferred losses among members of a controlled group under Section 267(f). The final regulations replace proposed regulations originally issued in April 2011 (REG-118761-09) with minor changes.

In general, Section 267(a)(1) provides that no deduction is allowed for any loss on the sale or exchange of property between certain related people. Section 267(f)(2) provides an exception for loss on the sale or exchange of property between members of a controlled group whereby the loss is deferred rather than disallowed. The regulations under Section 267(f) provide that the timing principles for intercompany sales or exchanges between members of a consolidated group apply to sales or exchanges of property between members of a controlled group. The attribute redetermination rules that apply to transactions between members of a consolidated group, however, do not apply to sales or exchanges between members