Treasury Regulations · 26 CFR
§ 1.1502-13 (page 2 of 2). Intercompany transactions.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 1502
Cite as 26 CFR § 1.1502-13
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- July 18, 1995 by T.D. 8597
- Issued under
- 26 U.S.C. § 1502
- Length
- 45,602 words · about 198 min to read · 2 pages
- Cross-references
- cites 88 Code sections and 46 regulations; cited by 64
¶(6) Former common parent treated as continuation of group. If a group terminates because the common parent is the only remaining member, the common parent succeeds to the treatment of the terminating group for purposes of applying this section so long as it neither becomes a member of an affiliated group filing separate returns nor becomes a corporation described in section 1504(b). For example, if the only subsidiary of the group liquidates into the common parent in a complete liquidation to which section 332 applies, or the common parent merges into the subsidiary and the subsidiary is treated as the common parent's successor under paragraph (j)(2)(i) of this section, the taxable income of the surviving corporation is treated as the group's consolidated taxable income in which the intercompany and corresponding items must be included. See § 1.267(f)-1 for additional rules applicable to intercompany losses or deductions.
¶(7) Becoming a nonmember. For purposes of this section, a member is treated as becoming a nonmember if it has a separate return year (including another group's consolidated return year). A member is not treated as having a separate return year if its items are treated as taken into account in computing the group's consolidated taxable income under paragraph (j)(5) or (6) of this section.
¶(8) Recordkeeping. Intercompany and corresponding items must be reflected on permanent records (including work papers). See also section 6001, requiring records to be maintained. The group must be able to identify from these permanent records the amount, location, timing, and attributes of the items, so as to permit the application of the rules of this section for each year.
¶(9) Section 987 QBUs. No intercompany transaction is attributable to a section 987 QBU (within the meaning of § 1.987-2(b)). That is, in order to produce single entity treatment, an intercompany transaction that otherwise would involve the section 987 QBU(s) of one or more members is treated instead as occurring directly between the members (without the involvement of any section 987 QBUs), and transfers are deemed to take place between each section 987 QBU and its owner (see § 1.987-2(c)(2)(ii)). For example, if a member (M1) lends money to the section 987 QBU of another member (M2), this intercompany transaction is treated as a loan from M1 to M2 and a contribution from M2 to its section 987 QBU.
¶(10) Examples. The operating rules of this paragraph (j) are illustrated generally throughout this section, and by the following examples.
¶(A) Facts. S holds land for investment with a basis of $70. On January 1 of Year 1, S sells the land to M for $100. M also holds the land for investment. On July 1 of Year 3, M transfers the land to B in exchange for all of B's stock in a transaction to which section 351 applies. Under section 358, M's basis in the B stock is $100. B holds the land for sale to customers in the ordinary course of business and, under section 362(b), B's basis in the land is $100. On December 1 of Year 5, M sells 20% of the B stock to X for $22. In an unrelated transaction on July 1 of Year 8, B sells 20% of the land for $22.
¶(B) Definitions. Under paragraph (b)(1) of this section, S's sale of the land to M and M's transfer of the land to B are both intercompany transactions. S is the selling member and M is the buying member in the first intercompany transaction, and M is the selling member and B is the buying member in the second intercompany transaction. M has no intercompany items under paragraph (b)(2) of this section. Because B acquired the land in an intercompany transaction, B's items from the land are corresponding items to be taken into account under this section. Under the successor asset rule of paragraph (j)(1) of this section, references to the land include references to M's B stock. Under the successor person rule of paragraph (j)(2) of this section, references to M include references to B with respect to the land.
¶(C) Timing and attributes resulting from the stock sale. Under paragraph (c)(3) of this section, M is treated as owning and selling B's stock for purposes of the matching rule even though, as divisions, M could not own and sell stock in B. Under paragraph (j)(3) of this section, both M's B stock and B's land can cause S's intercompany gain to be taken into account under the matching rule. Thus, S takes $6 of its gain into account in Year 5 to reflect the $6 difference between M's $2 gain taken into account from its sale of B stock and the $8 recomputed gain. Under paragraph (j)(4) of this section, the attributes of this gain are determined by treating S, M, and B as divisions of a single corporation. Under paragraph (c)(1) of this section, S's $6 gain and M's $2 gain are treated as long-term capital gain. The gain would be capital on a separate entity basis (assuming that section 341 does not apply), and this treatment is not inconsistent with treating S, M, and B as divisions of a single corporation because the stock sale and subsequent land sale are unrelated transactions and B remains a member following the sale.
¶(D) Timing and attributes resulting from the land sale. Under paragraph (j)(3) of this section, S takes $6 of its gain into account in Year 8 under the matching rule to reflect the $6 difference between B's $2 gain taken into account from its sale of an interest in the land and the $8 recomputed gain. Under paragraph (j)(4) of this section, the attributes of this gain are determined by treating S, M, and B as divisions of a single corporation and taking into account the activities of S, M, and B with respect to the land. Thus, both S's gain and B's gain might be ordinary income as a result of B's activities. (If B subsequently sells the balance of the land, S's gain taken into account is limited to its remaining $18 of intercompany gain.)
¶(E) Sale of successor stock resulting in deconsolidation. The facts are the same as in paragraph (j)(10)(i)(A) of this section (Example 1), except that M sells 60% of the B stock to X for $66 on December 1 of Year 5 and B becomes a nonmember. Under the matching rule, M's sale of B stock results in $18 of S's gain being taken into account (to reflect the difference between M's $6 gain taken into account and the $24 recomputed gain). Under the acceleration rule, however, the entire $30 gain is taken into account (to reflect B becoming a nonmember, because its basis in the land reflects M's $100 cost basis from the prior intercompany transaction). Under paragraph (j)(4) of this section, the attributes of S's gain are determined by treating S, M, and B as divisions of a single corporation. Because M's cost basis in the land will be reflected by B as a nonmember, all of S's gain is treated as from the land (rather than a portion being from B's stock), and B's activities with respect to the land might therefore result in S's gain being ordinary income.
¶(ii) Example 2. Intercompany sale of member stock followed by recapitalization—
¶(A) Facts. Before becoming a member of the P group, S owns P stock with a basis of $70. On January 1 of Year 1, P buys all of S's stock. On July 1 of Year 3, S sells the P stock to M for $100. On December 1 of Year 5, P acquires M's original P stock in exchange for new P stock in a recapitalization described in section 368(a)(1)(E).
¶(B) Timing and attributes. Although P's basis in the stock acquired from M is eliminated under paragraph (f)(4) of this section, the new P stock received by M is exchanged basis property (within the meaning of section 7701(a)(44)) having a basis under section 358 equal to M's basis in the original P stock. Under the successor asset rule of paragraph (j)(1) of this section, references to M's original P stock include references to M's new P stock. Because it is still possible to take S's intercompany item into account under the matching rule with respect to the successor asset, S's gain is not taken into account under the acceleration rule as a result of the basis elimination under paragraph (f)(4) of this section. Instead, the gain is taken into account based on subsequent events with respect to M's new P stock (for example, a subsequent distribution or redemption of the new stock).
¶(iii) Example 3. Back-to-back intercompany transactions—matching—
¶(A) Facts. S holds land for investment with a basis of $70. On January 1 of Year 1, S sells the land to M for $90. M also holds the land for investment. On July 1 of Year 3, M sells the land for $100 to B, and B holds the land for sale to customers in the ordinary course of business. During Year 5, B sells all of the land to customers for $105.
¶(B) Timing. Under paragraph (b)(1) of this section, S's sale of the land to M and M's sale of the land to B are both intercompany transactions. S is the selling member and M is the buying member in the first intercompany transaction, and M is the selling member and B is the buying member in the second intercompany transaction. Under paragraph (j)(4) of this section, S, M and B are treated as divisions of a single corporation for purposes of determining the timing of their items from the intercompany transactions. See also paragraph (j)(2) of this section (B is treated as a successor to M for purposes of taking S's intercompany gain into account). Thus, S's $20 gain and M's $10 gain are both taken into account in Year 5 to reflect the difference between B's $5 gain taken into account with respect to the land and the $35 recomputed gain (the gain that B would have taken into account if the intercompany sales had been transfers between divisions of a single corporation, and B succeeded to S's $70 basis).
¶(C) Attributes. Under paragraph (j)(4) of this section, the attributes of the intercompany items and corresponding items of S, M, and B are also determined by treating S, M, and B as divisions of a single corporation. For example, the attributes of S's and M's intercompany items are determined by taking B's activities into account.
¶(iv) Example 4. Back-to-back intercompany transactions—acceleration—
¶(A) Facts. During Year 1, S performs services for M in exchange for $10 from M. S incurs $8 of employee expenses. M capitalizes the $10 cost of S's services under section 263 as part of M's cost to acquire real property from X. Under its separate entity method of accounting, S would take its income and expenses into account in Year 1. M holds the real property for investment and, on July 1 of Year 5, M sells it to B at a gain. B also holds the real property for investment. On December 1 of Year 8, while B still owns the real property, P sells all of M's stock to X and M becomes a nonmember.
¶(B) M's items. M takes its gain into account immediately before it becomes a nonmember. Because the real property stays in the group, the acceleration rule redetermines the attributes of M's gain under the principles of the matching rule as if B sold the real property to an affiliated corporation that is not a member of the group for a cash payment equal to B's adjusted basis in the real property, and S, M, and B were divisions of a single corporation. Thus, M's gain is capital gain.
¶(C) S's items. Under paragraph (b)(2)(ii) of this section, S includes the $8 of expenses in determining its $2 intercompany income. In Year 1, S takes into account $8 of income and $8 of expenses. Under paragraph (j)(4) of this section, appropriate adjustments must be made to treat both S's performance of services for M and M's sale to B as occurring between divisions of a single corporation. Thus, S's $2 of intercompany income is not taken into account as a result of M becoming a nonmember, but instead will be taken into account based on subsequent events (e.g., under the matching rule based on B's sale of the real property to a nonmember, or under the acceleration rule based on P's sale of the stock of S or B to a nonmember). See the successor person rules of paragraph (j)(2) of this section (B is treated as a successor to M for purposes of taking S's intercompany income into account).
¶(D) Sale of S's stock. The facts are the same as in paragraph (j)(9)(iv)(A) of this section (Example 4), except that P sells all of S's stock (rather than M's stock) and S becomes a nonmember on July 1 of Year 5. S's remaining $2 of intercompany income is taken into account immediately before S becomes a nonmember. Because S's intercompany income is not from an intercompany sale, exchange, or distribution of property, the attributes of the intercompany income are determined on a separate entity basis. Thus, S's $2 of intercompany income is ordinary income. M does not take any of its intercompany gain into account as a result of S becoming a nonmember.
¶(E) Intercompany income followed by intercompany loss. The facts are the same as in paragraph (j)(9)(iv)(A) of this section (Example 4), except that M sells the real property to B at a $1 loss (rather than a gain). M takes its $1 loss into account under the acceleration rule immediately before M becomes a nonmember. But see § 1.267(f)-1 (which might further defer M's loss if M and B remain in a controlled group relationship after M becomes a nonmember). Under paragraph (j)(4) of this section appropriate adjustments must be made to treat the group as if both intercompany transactions occurred between divisions of a single corporation. Accordingly, P's sale of M stock also results in S taking into account $1 of intercompany income as capital gain to offset M's $1 of corresponding capital loss. The remaining $1 of S's intercompany income is taken into account based on subsequent events.
¶(v) Example 5. Successor group—
¶(A) Facts. On January 1 of Year 1, B borrows $100 from S in return for B's note providing for $10 of interest annually at the end of each year, and repayment of $100 at the end of Year 20. As of January 1 of Year 3, B has paid the interest accruing under the note. On that date, X acquires all of P's stock and the former P group members become members of the X consolidated group.
¶(B) Successor. Under paragraph (j)(5) of this section, although B's note ceases to be an intercompany obligation of the P group, the note is not treated as satisfied and reissued under paragraph (g) of this section as a result of X's acquisition of P stock. Instead, the X consolidated group succeeds to the treatment of the P group for purposes of paragraph (g) of this section, and B's note is treated as an intercompany obligation of the X consolidated group.
¶(vi) Example 6. Liquidation—80% distributee—
¶(A) Facts. X has had preferred stock described in section 1504(a)(4) outstanding for several years. On January 1 of Year 1, S buys all of X's common stock for $60, and B buys all of X's preferred stock for $40. X's assets have a $0 basis and $100 value. On July 1 of Year 3, X distributes all of its assets to S and B in a complete liquidation. Under § 1.1502-34, section 332 applies to both S and B. Under section 337, X has no gain or loss from its liquidating distribution to S. Under sections 336 and 337(c), X has a $40 gain from its liquidating distribution to B. B has a $40 basis under section 334(a) in the assets received from X, and S has a $0 basis under section 334(b) in the assets received from X.
¶(B) Intercompany items from the liquidation. Under the matching rule, X's $40 gain from its liquidating distribution to B is not taken into account under this section as a result of the liquidation (and therefore is not yet reflected under §§ 1.1502-32 and 1.1502-33). Under the successor person rule of paragraph (j)(2)(i) of this section, S and B are both successors to X. Under section 337(c), X recognizes gain or loss only with respect to the assets distributed to B. Under paragraph (j)(2)(ii) of this section, to be consistent with the purposes of this section, S succeeds to X's $40 intercompany gain. The gain will be taken into account by S under the matching and acceleration rules of this section based on subsequent events. (The allocation of the intercompany gain to S does not govern the allocation of any other attributes.)
¶(vii) Example 7. Liquidation—no 80% distributee—
¶(A) Facts. X has only common stock outstanding. On January 1 of Year 1, S buys 60% of X's stock for $60, and B buys 40% of X's stock for $40. X's assets have a $0 basis and $100 value. On July 1 of Year 3, X distributes all of its assets to S and B in a complete liquidation. Under § 1.1502-34, section 332 applies to both S and B. Under sections 336 and 337(c), X has a $100 gain from its liquidating distributions to S and B. Under section 334(b), S has a $60 basis in the assets received from X and B has a $40 basis in the assets received from X.
¶(B) Intercompany items from the liquidation. Under the matching rule, X's $100 intercompany gain from its liquidating distributions to S and B is not taken into account under this section as a result of the liquidation (and therefore is not yet reflected under §§ 1.1502-32 and 1.1502-33). Under the successor person rule of paragraph (j)(2)(i) of this section, S and B are both successors to X. Under paragraph (j)(2)(ii) of this section, to be consistent with the purposes of this section, S succeeds to X's $40 intercompany gain with respect to the assets distributed to B, and B succeeds to X's $60 intercompany gain with respect to the assets distributed to S. The gain will be taken into account by S and B under the matching and acceleration rules of this section based on subsequent events. (The allocation of the intercompany gain does not govern the allocation of any other attributes.)
¶(A) Facts. S owns all the interests in DE1, a disregarded entity operating a business that is a section 987 QBU (S QBU) whose functional currency is the euro. S has net unrecognized section 987 gain with respect to S QBU. In year 1, S QBU lends €100 to B with interest due annually. B makes interest payments on the loan to S QBU in years 1 through 3. In year 3, B repays the loan and recognizes section 988 loss of $12 on the loan repayment. All payments are made in euros, and B recognizes no section 988 gain or loss on the euros it uses to pay the interest and principal. B is never insolvent within the meaning of section 108(d)(3). Other than with respect to the loan, there are no transfers between S and S QBU during years 1 through 3, and neither S nor B had any other foreign currency gain or loss. Neither S nor B has made an election under section 988 or the section 988 regulations.
¶(B) Analysis—
¶(1) Loan. Under paragraph (j)(9) of this section, the loan is treated as a transfer from S QBU to S and a loan directly between S and B. Specifically, S is treated as receiving a transfer of €100 from S QBU in year 1; S is then treated as lending €100 directly to B. For purposes of § 1.987-2, the loan is attributable to S, not to S QBU. As an intercompany loan, S's loan to B is subject to the rules of this section. Because there is a remittance from S QBU to S in year 1, S recognizes section 987 gain under § 1.987-5.
¶(2) Interest payments. While the loan is outstanding, each of B's interest payments to S QBU is treated as an interest payment from B to S, followed by a transfer from S to S QBU. Under the matching rule in paragraph (c) of this section, S's intercompany interest income offsets B's corresponding interest expense. See paragraph (g)(7)(ii)(A)(2) of this section (Example 1). Since the functional currency of both S and B is the dollar, if B recognizes any section 988 gain or loss on the interest payments, S will recognize an offsetting amount of section 988 loss or gain. Because the only transfer between S and S QBU in year 2 is from S to S QBU, there is no remittance from S QBU to S and S does not recognize section 987 gain under § 1.987-5.
¶(3) Repayment. Upon the year 3 repayment of the loan, B is treated as repaying €100 to S, and S is treated as transferring €100 to S QBU. Since the functional currency of both S and B is the dollar, and B recognizes section 988 loss of $12 on the loan repayment, S will recognize an offsetting section 988 gain of $12. Because the only transfers between S and S QBU in year 3 are from S to S QBU, there is no remittance from S QBU to S and S does not recognize section 987 gain under § 1.987-5.
¶(C) Loan sold to non-member. The facts are the same as in paragraph (j)(10)(viii)(A) of this section, except that, in year 3, S QBU sells the loan to unrelated X for €90, reflecting an increase in prevailing market interest rates. Up until the sale, the analysis is the same as in paragraphs (j)(10)(viii)(B)(1) and (2) of this section. Because the loan is attributable to S (see paragraphs (j)(9) and (j)(10)(viii)(B)(1) of this section), the sale is treated as a sale by S. Under paragraph (g)(3) of this section, immediately before the sale, B is deemed to satisfy and reissue the loan for its fair market value of €90. As a result, B takes into account cancellation of indebtedness income, and S takes into account an offsetting amount of ordinary loss. See paragraph (g)(7)(ii) (Example 2) of this section. If there is currency gain or loss, S and B take into account offsetting amounts of gain and loss under section 988 (subject to the limitation of § 1.988-2(b)(8)). Because S has a basis of €90 in the new loan, S recognizes no gain or loss on the sale to X. S is then treated as transferring the €90 to S QBU.
¶(D) Party becomes a nonmember. The facts are the same as in paragraph (j)(10)(viii)(A) of this section, except that, in year 3, B becomes a nonmember. Up until B leaves the group, the analysis is the same as in paragraphs (j)(10)(viii)(B)(1) and (2) of this section. Immediately before B becomes a nonmember, B is deemed to satisfy and reissue the loan for its fair market value under paragraph (g)(3) of this section, with the same consequences as described in paragraph (j)(10)(viii)(C) of this section. When B becomes a nonmember, the loan (which is no longer an intercompany obligation) ceases to be subject to paragraph (j)(9) of this section. If the loan is attributable to S QBU under § 1.987-2, S is treated as transferring the loan to S QBU.
¶(B) Analysis—
¶(1) In general. Under paragraph (j)(9) of this section, the sale of property is treated as a transfer of the property from M1 QBU to M1, followed by an exchange of the property for €100 directly between M1 and M2, and a transfer of the €100 from M1 to M1 QBU.
¶(2) Distribution. M1 QBU is treated as transferring the property to M1.
¶(3) Exchange. M1 is then treated as selling the property to M2 for €100. M1 takes into account its intercompany gain or loss on the property under the rules of this section. M2 recognizes intercompany section 988 gain or loss on its exchange of €100 for the property. See paragraph (b)(1)(iii) of this section for property exchanges between members.
¶(4) Contribution. Finally, M1 is treated as transferring the €100 to M1 QBU. Because M1's basis in the €100 equals its fair market value, M1 has a corresponding section 988 gain or loss of zero upon the contribution. See § 1.988-1(a)(10). Both the transfer of the property from M1 QBU to M1 and the transfer of the €100 from M1 to M1 QBU are taken into account in determining whether there is a remittance from M1 QBU to M1 in year 1 and whether M1 recognizes section 987 gain under § 1.987-5.
¶(5) Summary. Overall, in year 1, M1 may take into account section 987 gain if the transfers between M1 and M1 QBU result in a remittance, and M2 takes into account section 988 gain or loss on the €100. This result is consistent with the treatment of a single corporation that purchases property from its section 987 QBU.
¶(k) Cross references—
¶(2) Section 263A(f). See section 263A(f) and § 1.263A-9(g)(5) for special rules regarding interest from intercompany transactions.
¶(3) Section 267(f). See section 267(f) and § 1.267(f)-1 for special rules applicable to certain losses and deductions from transactions between members of a controlled group.
¶(4) Section 460. See § 1.460-4(j) for special rules regarding the application of section 460 to intercompany transactions.
¶(5) Section 469. See § 1.469-1(h) for special rules regarding the application of section 469 to intercompany transactions.
¶(l) Effective/applicability dates—
¶(1) In general. This section applies with respect to transactions occurring in years beginning on or after July 12, 1995. If both this section and prior law apply to a transaction, or neither applies, with the result that items may be duplicated, omitted, or eliminated in determining taxable income (or tax liability), or items may be treated inconsistently, prior law (and not this section) applies to the transaction. For example, S's and B's items from S's sale of property to B which occurs in a consolidated return year beginning before July 12, 1995, are taken into account under prior law, even though B may dispose of the property in a consolidated return year beginning on or after July 12, 1995. Similarly, an intercompany distribution to which a shareholder becomes entitled in a consolidated return year beginning before July 12, 1995, but which is distributed in a consolidated return year beginning on or after that date is taken into account under prior law (generally when distributed), because this section generally takes dividends into account when the shareholder becomes entitled to them but this section does not apply at that time. If application of prior law to S's deferred gain or loss from a deferred intercompany transaction (as defined under prior law) occurring in a consolidated return year beginning prior to July 12, 1995, would be affected by an intercompany transaction (as defined under this section) occurring in a consolidated return year beginning on or after July 12, 1995, S's deferred gain or loss continues to be taken into account as provided under prior law, and the items from the subsequent intercompany transaction are taken into account under this section. Appropriate adjustments must be made to prevent items from being duplicated, omitted, or eliminated in determining taxable income as a result of the application of both this section and prior law to the successive transactions, and to ensure the proper application of prior law. Paragraphs (a)(4), (f)(6)(ii), (f)(6)(iv)(A), (g)(3)(ii)(B)(2), and (j)(5)(i)(A) of this section apply with respect to transactions occurring on or after September 17, 2008. However, taxpayers may apply paragraph (j)(5)(i)(A) of this section to transactions that occurred prior to September 17, 2008.
¶(2) Avoidance transactions. This paragraph (l)(2) applies if a transaction is engaged in or structured on or after April 8, 1994, with a principal purpose to avoid the rules of this section (and instead to apply prior law). If this paragraph (l)(2) applies, appropriate adjustments must be made in years beginning on or after July 12, 1995, to prevent the avoidance, duplication, omission, or elimination of any item (or tax liability), or any other inconsistency with the rules of this section. For example, if S is a dealer in real property and sells land to B on March 16, 1995 with a principal purpose of converting any future appreciation in the land to capital gain, B's gain from the sale of the land on May 11, 1997 might be characterized as ordinary income under this paragraph (l)(2).
¶(3) Election for certain stock elimination transactions—
¶(i) In general. A group may elect pursuant to this paragraph (l)(3) to apply this section (including the elections available under paragraph (f)(5)(ii) of this section) to stock elimination transactions to which prior law would otherwise apply. If an election is made, this section, and not prior law, applies to determine the timing and attributes of S's and B's gain or loss from stock with respect to all stock elimination transactions.
¶(ii) Stock elimination transactions. For purposes of this paragraph (l)(3), a stock elimination transaction is a transaction in which stock transferred from S to B—
¶(A) Is cancelled or redeemed on or after July 12, 1995;
¶(B) Is treated as cancelled in a liquidation pursuant to an election under section 338(h)(10) with respect to a qualified stock purchase with an acquisition date on or after July 12, 1995;
¶(C) Is distributed on or after July 12, 1995; or
¶(D) Is exchanged on or after July 12, 1995 for stock of a member (determined immediately after the exchange) in a transaction that would cause S's gain or loss from the transfer to be taken into account under prior law.
¶(iii) Time and manner of making election. An election under this paragraph (l)(3) is made by attaching to a timely filed original return (including extensions) for the consolidated return year including July 12, 1995 a statement entitled “[Insert Name and Employer Identification Number of Common Parent] HEREBY ELECTS THE APPLICATION OF § 1.1502-13(l)(3).” See paragraph (f)(5)(ii)(E) of this section for the manner of electing the relief provisions of paragraph (f)(5)(ii) of this section.
¶(4) Prior law. For transactions occurring in S's years beginning before July 12, 1995, see the applicable regulations issued under section 1502. See §§ 1.1502-13, 1.1502-13T, 1.1502-14, 1.1502-14T, 1.1502-31, and 1.1502-32 (as contained in the 26 CFR part 1 edition revised as of April 1, 1995).
¶(5) Consent to adopt method of accounting. For intercompany transactions occurring in a consolidated group's first taxable year beginning on or after July 12, 1995, the Commissioner's consent under section 446(e) is hereby granted for any changes in methods of accounting that are necessary solely by reason of the timing rules of this section. Changes in method of accounting for these transactions are to be effected on a cut-off basis.
¶(6) Applicability date regarding paragraph (f)(7)(iv) of this section (Example 4). Paragraph (f)(7)(iv) of this section (Example 4) applies to transactions occurring on or after December 18, 2009.
¶(7) Applicability date. Generally, paragraph (j)(9) of this section applies to taxable years beginning after December 31, 2024, for which the original Federal income tax return is due (without extensions) after December 11, 2024. However, if pursuant to § 1.987-15(b), a taxpayer chooses to apply §§ 1.987-1 through 1.987-15 to a taxable year before the first taxable year described in § 1.987-15(a)(1), then paragraph (j)(9) of this section applies to that taxable year and subsequent years.
¶(8) Election to apply paragraph (f)(5)(ii) of this section to an intercompany transaction. Paragraph (f)(5)(ii)(E) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007.
¶(9) Election to reduce basis of parent stock under paragraph (f)(6) of this section. Paragraph (f)(6)(i)(C)(2) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007.
¶(10) Certain qualified stock dispositions. Paragraph (f)(5)(ii)(C) of this section applies to any qualified stock disposition (as defined in § 1.336-1(b)(6)) for which the disposition date (as defined in § 1.336-1(b)(8)) is on or after May 15, 2013.
[T.D. 8597, 60 FR 36685, July 18, 1995]
Editorial Note:
For Federal Register citations affecting § 1.1502-13, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 446 General rule for methods of accounting
- § 267 Losses, expenses, and interest with respect to transactions between related taxpayers
- § 1091 Loss from wash sales of stock or securities
- § 351 Transfer to corporation controlled by transferor
- § 382 Limitation on net operating loss carryforwards and certain built-in losses following ownership change
- § 332 Complete liquidations of subsidiaries
- § 355 Distribution of stock and securities of a controlled corporation
- § 250 Foreign-derived deduction eligible income and net CFC tested income
- § 108 Income from discharge of indebtedness
- § 368 Definitions relating to corporate reorganizations
- § 163 Interest
- § 987 Branch transactions
- § 263A Capitalization and inclusion in inventory costs of certain expenses
- § 265 Expenses and interest relating to tax-exempt income
- § 311 Taxability of corporation on distribution
- § 1031 Exchange of real property held for productive use or investment
- § 304 Redemption through use of related corporations
- § 453 Installment method
- § 1032 Exchange of stock for property
- § 581 Definition of bank
- § 7701 Definitions
- § 801 Tax imposed
- § 582 Bad debts, losses, and gains with respect to securities held by financial institutions
- § 818 Other definitions and special rules
Show 64 more
- § 280B Demolition of structures
- § 362 Basis to corporations
- § 1221 Capital asset defined
- § 168 Accelerated cost recovery system
- § 1245 Gain from dispositions of certain depreciable property
- § 1231 Property used in the trade or business and involuntary conversions
- § 453A Special rules for nondealers
- § 453B Gain or loss on disposition of installment obligations
- § 165 Losses
- § 263 Capital expenditures
- § 754 Manner of electing optional adjustment to basis of partnership property
- § 743 Special rules where section 754 election or substantial built-in loss
- § 751 Unrealized receivables and inventory items
- § 475 Mark to market accounting method for dealers in securities
- § 1092 Straddles
- § 1256 Section 1256 contracts marked to market
- § 863 Special rules for determining source
- § 1248 Gain from certain sales or exchanges of stock in certain foreign corporations
- § 951 Amounts included in gross income of United States shareholders
- § 301 Distributions of property
- § 358 Basis to distributees
- § 861 Income from sources within the United States
- § 1239 Gain from sale of depreciable property between certain related taxpayers
- § 1017 Discharge of indebtedness
- § 481 Adjustments required by changes in method of accounting
- § 585 Reserves for losses on loans of banks
- § 807 Rules for certain reserves
- § 845 Certain reinsurance agreements
- § 1382 Taxable income of cooperatives
- § 243 Dividends received by corporations
- § 305 Distributions of stock and stock rights
- § 302 Distributions in redemption of stock
- § 356 Receipt of additional consideration
- § 354 Exchanges of stock and securities in certain reorganizations
- § 338 Certain stock purchases treated as asset acquisitions
- § 336 Gain or loss recognized on property distributed in complete liquidation
- § 331 Gain or loss to shareholder in corporate liquidations
- § 1012 Basis of property—cost
- § 1504 Definitions
- § 6501 Limitations on assessment and collection
- § 381 Carryovers in certain corporate acquisitions
- § 361 Nonrecognition of gain or loss to corporations; treatment of distributions
- § 467 Certain payments for the use of property or services
- § 1273 Determination of amount of original issue discount
- § 61 Gross income defined
- § 103 Interest on State and local bonds
- § 1271 Treatment of amounts received on retirement or sale or exchange of debt instruments
- § 1274 Determination of issue price in the case of certain debt instruments issued for property
- § 166 Bad debts
- § 337 Nonrecognition for property distributed to parent in complete liquidation of subsidiary
- § 1001 Determination of amount of and recognition of gain or loss
- § 482 Allocation of income and deductions among taxpayers
- § 269 Acquisitions made to evade or avoid income tax
- § 721 Nonrecognition of gain or loss on contribution
- § 704 Partner’s distributive share
- § 197 Amortization of goodwill and certain other intangibles
- § 707 Transactions between partner and partnership
- § 732 Basis of distributed property other than money
- § 6001 Notice or regulations requiring records, statements, and special returns
- § 341 Repealed
- § 334 Basis of property received in liquidations
- § 988 Treatment of certain foreign currency transactions
- § 460 Special rules for long-term contracts
- § 469 Passive activity losses and credits limited
Regulations it cites
- § 1.1502-17 Methods of accounting.
- § 1.1502-80 Applicability of other provisions of law.
- § 1.446-1 General rule for methods of accounting.
- § 1.1502-32 Investment adjustments.
- § 1.1502-21 Net operating losses.
- § 1.863-3 Allocation and apportionment of income from certain sales of inventory.
- § 1.250(b)-1 Computation of foreign-derived intangible income (FDII).
- § 1.1502-50 Consolidated section 250.
- § 1.1502-33 Earnings and profits.
- § 1.1502-75 Filing of consolidated returns.
- § 1.1502-19 Excess loss accounts.
- § 1.1502-26 Consolidated dividends received deduction.
- § 1.1032-3 Disposition of stock or stock options in certain transactions not qualifying under any other nonrecognition provision.
- § 1.302-2 Redemptions not taxable as dividends.
- § 1.368-2 Definition of terms.
- § 1.1275-1 Definitions.
- § 1.1502-36 Unified loss rule.
- § 1.1502-28 Consolidated section 108.
- § 1.1503(d)-4 Domestic use limitation and related operating rules.
- § 1.108-2 Acquisition of indebtedness by a person related to the debtor.
- § 1.1001-3 Modifications of debt instruments.
- § 1.163-7 Deduction for OID on certain debt instruments.
- § 1.1273-1 Definition of OID.
- § 1.446-2 Method of accounting for interest.
Show 22 more
- § 1.61-12 Income from discharge of indebtedness.
- § 1.338-4 Aggregate deemed sale price; various aspects of taxation of the deemed asset sale.
- § 1.338-6 Allocation of ADSP and AGUB among target assets.
- § 1.163-13 Treatment of bond issuance premium.
- § 1.1502-15 SRLY limitation on built-in losses.
- § 1.446-3 Notional principal contracts.
- § 1.701-2 Anti-abuse rule.
- § 1.1502-22 Consolidated capital gain and loss.
- § 1.1502-34 Special aggregate stock ownership rules.
- § 1.163(j)-10 Allocation of interest expense, interest income, and other items of expense and gross income to an excepted trade or business.
- § 1.267(f)-1 Controlled groups.
- § 1.987-2 Attribution of items to eligible QBUs; definition of a transfer and related rules.
- § 1.987-5 Recognition of section 987 gain or loss.
- § 1.988-2 Recognition and computation of exchange gain or loss.
- § 1.988-1 Certain definitions and special rules.
- § 1.108-3 Intercompany losses and deductions.
- § 1.263A-9 The avoided cost method.
- § 1.460-4 Methods of accounting for long-term contracts.
- § 1.469-1 General rules.
- § 1.987-15 Applicability date.
- § 1.987-1 Scope, definitions, and special rules.
- § 1.336-1 General principles, nomenclature, and definitions for a section 336(e) election.
Cited by 64 other regulations
- § 1.45X-2 Sale to unrelated person.
- § 1.108-3 Intercompany losses and deductions.
- § 1.108(i)-0 Definitions and effective/applicability dates.
- § 1.108(i)-2 Application of section 108(i) to partnerships and S corporations.
- § 1.163(j)-1 Definitions.
- § 1.163(j)-4 General rules applicable to C corporations (including REITs, RICs, and members of consolidated groups) and tax-exempt corporations.
- § 1.163(j)-10 Allocation of interest expense, interest income, and other items of expense and gross income to an excepted trade or business.
- § 1.167(a)-11 Depreciation based on class lives and asset depreciation ranges for property placed in service after December 31, 1970.
- § 1.167(c)-1 Limitations on methods of computing depreciation under section 167(b) (2), (3), and (4).
- § 1.199A-8 Deduction for income attributable to domestic production activities of specified agricultural or horticultural cooperatives.
- § 1.199A-12 Expanded affiliated groups.
- § 1.263A-1 Uniform capitalization of costs.
- § 1.263A-7 Changing a method of accounting under section 263A.
- § 1.267(f)-1 Controlled groups.
- § 1.279-6 Application of section 279 to certain affiliated groups.
- § 1.336-2 Availability, mechanics, and consequences of section 336(e) election.
- § 1.337(d)-1 Transitional loss limitation rule.
- § 1.338-8 Asset and stock consistency.
- § 1.367(a)-8 Gain recognition agreement requirements.
- § 1.385-4 Treatment of consolidated groups.
- § 1.446-1 General rule for methods of accounting.
- § 1.446-4 Hedging transactions.
- § 1.451-3 Timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting.
- § 1.460-4 Methods of accounting for long-term contracts.
Show 40 more
- § 1.469-1 General rules.
- § 1.472-2 Requirements incident to adoption and use of LIFO inventory method.
- § 1.475(b)-1 Scope of exemptions from mark-to-market requirement.
- § 1.721(c)-5 Acceleration event exceptions.
- § 1.861-8T Computation of taxable income from sources within the United States and from other sources and activities (temporary).
- § 1.863-1 Allocation of gross income under section 863(a).
- § 1.863-3 Allocation and apportionment of income from certain sales of inventory.
- § 1.863-8 Source of income derived from space and ocean activity under section 863(d).
- § 1.865-2 Loss with respect to stock.
- § 1.904-4 Separate application of section 904 with respect to certain categories of income.
- § 1.965-7 Elections, payment, and other special rules.
- § 1.987-2 Attribution of items to eligible QBUs; definition of a transfer and related rules.
- § 1.1221-2 Hedging transactions.
- § 1.1275-6 Integration of qualifying debt instruments.
- § 1.1297-1 Definition of passive foreign investment company.
- § 1.1362-8 Dividends received from affiliated subsidiaries.
- § 1.1502-3 Consolidated tax credits.
- § 1.1502-4 Consolidated foreign tax credit.
- § 1.1502-9 Consolidated overall foreign losses, separate limitation losses, and overall domestic losses.
- § 1.1502-12 Separate taxable income.
- § 1.1502-14Z Application of opportunity zone rules to members of a consolidated group.
- § 1.1502-17 Methods of accounting.
- § 1.1502-19 Excess loss accounts.
- § 1.1502-26 Consolidated dividends received deduction.
- § 1.1502-28 Consolidated section 108.
- § 1.1502-32 Investment adjustments.
- § 1.1502-33 Earnings and profits.
- § 1.1502-36 Unified loss rule.
- § 1.1502-47 Consolidated returns by life-nonlife groups.
- § 1.1502-50 Consolidated section 250.
- § 1.1502-59A Application of section 59A to consolidated groups.
- § 1.1502-68 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.1502-76 Taxable year of members of group.
- § 1.1502-80 Applicability of other provisions of law.
- § 1.1502-91 Application of section 382 with respect to a consolidated group.
- § 1.1502-94 Coordination with section 382 and the regulations thereunder when a corporation becomes a member of a consolidated group.
- § 1.1503(d)-1 Definitions, special rules, and filings.
- § 1.1503(d)-6 Exceptions to the domestic use limitation rule.
- § 1.1503(d)-7 Examples.
- § 1.1552-1 Earnings and profits.
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 8597 (60 FR 36685)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Computation of Separate Taxable Income