§1552 — Title 26 Internal Revenue Code | U.S. Code

Summary

Requires a group that files a consolidated return to split the group's tax among its members to figure each member’s earnings and profits. Under rules set by the Secretary, the group must pick one of four ways on its first consolidated return for the year. Method (1) splits the tax by each member’s share of the consolidated taxable income. Method (2) splits the tax by each member’s separate-return tax as a share of all members’ separate-return taxes. Method (3) allocates the group tax (except increases caused by consolidation) by each member’s contribution to consolidated taxable income; any tax increases from consolidation are shared in proportion to how much each member’s tax fell because of filing together (the difference between their separate-return tax and their contribution-based tax). Method (4) allows any other method approved by the Secretary. If the group makes no choice on the first return, method (1) is used.

Title 26, §1552

Internal Revenue Code — Source: USLM XML via OLRC

(a)Pursuant to regulations prescribed by the Secretary the earnings and profits of each member of an affiliated group required to be included in a consolidated return for such group filed for a taxable year shall be determined by allocating the tax liability of the group for such year among the members of the group in accord with whichever of the following methods the group shall elect in its first consolidated return filed for such a taxable year:

(1)The tax liability shall be apportioned among the members of the group in accordance with the ratio which that portion of the consolidated taxable income attributable to each member of the group having taxable income bears to the consolidated taxable income.

(2)The tax liability of the group shall be allocated to the several members of the group on the basis of the percentage of the total tax which the tax of such member if computed on a separate return would bear to the total amount of the taxes for all members of the group so computed.

(3)The tax liability of the group (excluding the tax increases arising from the consolidation) shall be allocated on the basis of the contribution of each member of the group to the consolidated taxable income of the group. Any tax increases arising from the consolidation shall be distributed to the several members in direct proportion to the reduction in tax liability resulting to such members from the filing of the consolidated return as measured by the difference between their tax liabilities determined on a separate return basis and their tax liabilities based on their contributions to the consolidated taxable income.

(4)The tax liability of the group shall be allocated in accord with any other method selected by the group with the approval of the Secretary.

(b)If no election is made in such first return, the tax liability shall be allocated among the several members of the group pursuant to the method prescribed in subsection (a)(1).

Notes & Related Subsidiaries

Editorial Notes

Amendments

1976—Subsec. (a). Pub. L. 94–455, §§ 1901(a)(159), 1906(b)(13)(A), struck out “beginning after December 31, 1953, and ending after the date of enactment of this title” after “group filed for a taxable year”, and “or his delegate” after “Secretary” in two places. 1964—Subsec. (a)(3). Pub. L. 88–272 struck out “(determined without regard to the 2 percent increase provided by section 1503(a))”, before “based on their contributions”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1976 AmendmentAmendment by section 1901(a)(159) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Effective Date

of 1964 AmendmentAmendment by Pub. L. 88–272 applicable to taxable years beginning after Dec. 31, 1963, see section 234(c) of Pub. L. 88–272, set out as a note under section 1503 of this title.

§1552 Earnings and Profits

Summary

Title 26, §1552

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata