26 U.S.C. § 1552 — Earnings and profits

submitted 72 years ago by ch. 736 to r/title-26-INTERNAL-REVENUE-CODE · 338 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section gives affiliated groups four ways to allocate a consolidated tax liability among group members.

(a) General rule. Under the Secretary’s regulations, the earnings and profits of each member of an affiliated group required to file a consolidated return must be determined by allocating the group’s tax liability among members using the method the group chooses in its first consolidated return for the year: (1) allocate tax according to each member’s share of consolidated taxable income among members with taxable income; (2) allocate it according to each member’s separate-return tax as a percentage of all members’ separate-return taxes; (3) allocate the tax excluding consolidation increases according to each member’s contribution to consolidated taxable income, and distribute consolidation increases in proportion to each member’s tax reduction from filing jointly; or (4) use another method approved by the Secretary. (b) If the group makes no election in that first return, use the method in paragraph (a)(1).

the actual law source: uscode.house.gov ↗public domain

(a) General rule

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) Failure to elect

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).

Source credit: (Aug. 16, 1954, ch. 736, 68A Stat. 371; Pub. L. 88–272, title II, § 234(b)(8), Feb. 26, 1964, 78 Stat. 116; Pub. L. 94–455, title XIX, §§ 1901(a)(159), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1790, 1834.)

history & why it existsrecord from the source credit

1954Enacted · Act of Aug. 16, 1954, ch. 736
1964Amended · Pub. L. 88-272 · 78 Stat. 116
1976Amended · Pub. L. 94-455 · 90 Stat. 1790, 1834

A history note hasn’t been published yet. The record shows enactment by ch. 736 on 1954-08-16.

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