Internal Revenue Bulletin 2023-34 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2023–34
August 21, 2023
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Announcement 2023-23, page 569.
The Office of Professional Responsibility (OPR) announces
recent disciplinary sanctions involving attorneys, certified
public accountants, enrolled agents, enrolled actuaries,
enrolled retirement plan agents, and appraisers. These indi-
viduals are subject to the regulations governing practice
before the Internal Revenue Service (IRS), which are set out in
Title 31, Code of Federal Regulations, Part 10, and which are
published in pamphlet form as Treasury Department Circular
No. 230. The regulations prescribe the duties and restric-
tions relating to such practice and prescribe the disciplinary
sanctions for violating the regulations.
ESTATE TAX
Rev. Rul. 2023-15, page 559.
The 2023 interest rates to be used in computing the spe-
cial use value of farm real property for which an election is
made under section 2032A of the Code are listed for estate
of decedents.
INCOME TAX
Notice 2023-57, page 560.
The notice announces the inflation adjustment factor and
phase-out amount for the enhanced oil recovery credit for tax-
able years beginning in the 2023 calendar year. The format
of the notice is identical to the format of previously published
notices on this issue. The notice concludes that because the
reference price for the 2022 calendar year ($93.97) exceeds
$28 multiplied by the inflation adjustment factor for the
2023 calendar year ($28 multiplied by 1.9998 = $55.99) by
$37.98, the enhanced oil recovery credit for qualified costs
paid or incurred in 2023 is phased-out completely.
Notice 2023-58, page 563.
The notice provides the applicable reference price for qual-
ified natural gas production from qualified marginal wells
during taxable years beginning in calendar year 2023
for the purpose of determining the marginal well produc-
tion credit under § 45I. The applicable reference price for
taxable years beginning in calendar year 2023 is $5.57
per 1,000 cubic feet. The notice also provides the credit
amount used for the purpose of determining the marginal
well production credit. The credit amount for taxable years
beginning in calendar year 2023 is $0.00 per 1,000 cubic
feet.
Notice 2023-59, page 564.
The notice announces forthcoming proposed regulations
and provides interim guidance regarding Home Energy
Audits for purposes of the § 25C energy efficient home
improvement credit, as well as a transition rule for certain
Home Energy Audits conducted during taxable years ending
in calendar year 2023.
REG-134420-10, page 571.
These proposed regulations revise the consolidated return
regulations to reflect statutory changes, modernize lan-
guage, and enhance clarity.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
August 21, 2023 Bulletin No. 2023–34

Part I
Section 2032A.—Valuation
of Certain Farm, Etc., Real
Property
26 CFR 20.2032A-4: Method of valuing farm real
property.
Rev. Rul. 2023-15
This revenue ruling contains a list
of the average annual effective interest
rates on new loans under the Farm Credit
System. This revenue ruling also contains
a list of the states within each Farm Credit
System Bank Territory.
Under § 2032A(e)(7)(A)(ii) of the
Internal Revenue Code, rates on new
Farm Credit System Bank loans are
used in computing the special use
value of real property used as a farm
for which an election is made under
§ 2032A. The rates in Table 1 of this
revenue ruling may be used by estates
that value farmland under § 2032A as
of a date in 2023.
Average annual effective interest
rates, calculated in accordance with
§ 2032A(e)(7)(A) and § 20.2032A-4(e)
of the Estate Tax Regulations, to be used
under § 2032A(e)(7)(A)(ii), are set forth
in the accompanying Table of Interest
Rates (Table 1). The states within each
Farm Credit System Bank Territory are
set forth in the accompanying Table of
Farm Credit System Bank Territories
(Table 2).
Rev. Rul. 81-170, 1981-1 C.B. 454,
contains an illustrative computation of
an average annual effective interest rate.
The rates applicable for valuation in 2022
are in Rev. Rul. 2022-16, 2022-35 I.R.B.
171. For rate information for years prior
to 2022, see Rev. Rul. 2021-15, 2021-35
I.R.B. 331, and other revenue rulings that
are referenced therein.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Lane Damazo of the Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this revenue ruling, con-
tact Lane Damazo at (202) 317-4628 (not
a toll-free number).
REV. RUL. 2023-15 TABLE 1
TABLE OF INTEREST RATES
(Year of Valuation 2023)
Farm Credit System Bank Servicing State in
Which Property is Located Rate
AgFirst, FCB ................................. 5.33
AgriBank, FCB ............................... 4.83
CoBank, ACB ................................ 4.83
Texas, FCB .................................. 5.22
REV. RUL. 2023-15 TABLE 2
TABLE OF FARM CREDIT SYSTEM BANK TERRITORIES
Farm Credit System Bank Location of Property
AgFirst, FCB .................................... Delaware, District of Columbia, Florida, Georgia,
Maryland, North Carolina, Pennsylvania, South Carolina,
Virginia, West Virginia.
AgriBank, FCB ................................. Arkansas, Illinois, Indiana, Iowa, Kentucky, Michigan,
Minnesota, Missouri, Nebraska, North Dakota, Ohio,
South Dakota, Tennessee, Wisconsin, Wyoming.
CoBank, ACB
..................................

Alaska, Arizona, California, Colorado, Connecticut,
Hawaii, Idaho, Kansas, Maine, Massachusetts, Montana,
New Hampshire, New Jersey
, New Mexico, New York,
Nevada, Oklahoma, Oregon, Rhode Island, Utah, Vermont,
Washington.
Texas, FCB
.......................................

Alabama, Louisiana, Mississippi, T
exas.
Bulletin No. 2023–34 559 August 21, 2023

Part III
2023 Section 43 Inflation
Adjustment
Notice 2023-57
Section 43(a) of the Internal Revenue
Code provides that for purposes of sec-
tion 38, the enhanced oil recovery credit
for any taxable year is an amount equal
to 15 percent of the taxpayer’s qualified
enhanced oil recovery costs for such tax-
able year.
Section 43(b)(1) provides that the
amount of the credit determined under
subsection (a) for any taxable year shall
be reduced by an amount which bears the
same ratio to the amount of such credit
(determined without regard to this para-
graph) as — (A) the amount by which
the reference price for the calendar year
preceding the calendar year in which the
taxable years begins exceeds $28, bears to
(B) $6.
Section 43(b)(3)(B) requires the
Secretary to publish an inflation adjust-
ment factor. The enhanced oil recovery
credit under § 43 for any taxable year is
reduced if the “reference price,” deter-
mined under § 45K(d)(2)(C), for the cal-
endar year preceding the calendar year in
which the taxable year begins is greater
than $28 multiplied by the inflation adjust-
ment factor the current calendar year.
The term “inflation adjustment factor”
means, with respect to any calendar year,
a fraction the numerator of which is the
GNP implicit price deflator for the preced-
ing calendar year and the denominator of
which is the GNP implicit price deflator
for 1990.
Because the reference price for the
2022 calendar year ($93.97) exceeds $28
multiplied by the inflation adjustment fac-
tor for the 2023 calendar year ($28 multi-
plied by 1.9998 = $55.99) by $37.98, the
enhanced oil recovery credit for qualified
costs paid or incurred in 2023 is phased
out completely.
Table 1 contains the GNP implicit price
deflator used for the 2022 calendar year,
as well as the previously published GNP
implicit price deflators used for the 1991
through 2021 calendar years.
August 21, 2023 560 Bulletin No. 2023–34

Bulletin No. 2023–34 561 August 21, 2023
Notice 2023-57 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar YearGNP Implicit Price Deflator
1990112.9(used for 1991)
1991117.0(used for 1992)
1992120.9(used for 1993)
1993124.1(used for 1994)
1994126.0(used for 1995)*
1995107.5(used for 1996)
1996109.7(used for 1997)**
1997112.35(used for 1998)
1998112.64(used for 1999)***
1999104.59(used for 2000)
2000106.89(used for 2001)
2001109.31(used for 2002)
2002110.63(used for 2003)
2003105.67(used for 2004)****
2004108.23(used for 2005)
2005112.129(used for 2006)
2006116.036(used for 2007)
2007119.656(used for 2008)
2008122.407(used for 2009)
2009109.764(used for 2010)*****
2010110.654(used for 2011)
2011113.347(used for 2012)******
2012115.387(used for 2013)
2013106.710(used for 2014)*******
2014108.407(used for 2015)********
2015109.868(used for 2016)
2016111.528(used for 2017)
2017113.500(used for 2018)
2018110.308(used for 2019)*********
2019112.257(used for 2020)
2020113.586(used for 2021)
2021118.586(used for 2022)**********
2022127.194(used for 2023)
* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996
§ 43 inflation adjustment factor is 93.6.
** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the
1998 § 43 inflation adjustment factor is 93.63.
*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the
2000 § 43 inflation adjustment factor is 86.53.
**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2004 § 43
inflation adjustment factor is 81.589.
***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2010 § 43
inflation adjustment factor is 72.199.
****** Beginning in 2011, the 1990 GNP implicit price deflator used to compute the 2012 § 43 inflation adjustment factor is 72.260.
******* Beginning in 2013, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2014 § 43
inflation adjustment factor is 66.803.
******** Beginning in 2014, the 1990 GNP implicit price deflator used to compute the 2015 § 43 inflation adjustment factor is 66.732.
********* Beginning in 2018, the 1990 GNP implicit price deflator used to compute the 2019 § 43 inflation adjustment factor is 63.637.
********** Beginning in 2021, the 1990 GNP implicit price deflator used to compute the 2022 § 43 inflation adjustment factor is 63.604.

August 21, 2023 562 Bulletin No. 2023–34
Table 2 contains the inflation adjust-
ment factor and the phase-out amount
for taxable years beginning in the 2023
calendar year as well as the previously
published inflation adjustment factors
and phase-out amounts for taxable years
beginning in the 1991 through 2022 cal-
endar years.
Notice 2023-57 TABLE 2
INFLATION ADJUSTMENT FACTORS AND
PHASE-OUT AMOUNTS
Calendar Year Inflation Adjustment Factor Phase-out Amount
19911.00000
19921.03630
19931.07080
19941.09920
19951.11600
19961.14850
19971.17200
19981.19990
19991.20300
20001.20870
20011.23530
20021.26330
20031.27850
20041.29520
20051.32660
20061.3743100 percent
20071.4222100 percent
20081.4666100 percent
20091.5003100 percent
20101.5203100 percent
20111.5326100 percent
20121.5686100 percent
20131.5968100 percent
20141.5974100 percent
20151.6245100 percent
20161.64640
20171.67130
20181.70081.069 percent
20191.7334100 percent
20201.7640100 percent
20211.78490
20221.8607100 percent
20231.9998100 percent
DRAFTING INFORMATION
The principal author of this notice
is John M. Deininger of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this notice, contact Mr.
Deininger at (202) 317-6853 (not a toll-
free number).

Bulletin No. 2023–34 563 August 21, 2023
Reference Price for Section
45I Credit for Production of
Natural Gas from Marginal
Wells During Taxable Years
Beginning in Calendar Year
2023
Notice 2023-58
SECTION 1. PURPOSE
This notice provides the applicable
reference price for qualified natural gas
production from qualified marginal wells
during taxable years beginning in calen-
dar year 2023 for the purpose of deter-
mining the marginal well production
credit (MWC) under § 45I of the Internal
Revenue Code. The applicable reference
price for taxable years beginning in cal-
endar year 2023 is $5.57 per 1,000 cubic
feet (Mcf).
This notice also provides the credit
amount used for the purpose of determin-
ing the MWC for taxable years begin-
ning in calendar year 2023. The credit
amount is determined using the 2023
inflation adjustment factor of 1.4993 and
the applicable reference price of $5.57 per
Mcf. The credit amount for taxable years
beginning in calendar year 2023 is $0.00
per Mcf.
SECTION 2. BACKGROUND
Section 45I(a), as it relates to quali-
fied natural gas production, provides that,
for purposes of § 38, the MWC for any
taxable year is an amount equal to the
product of (1) the credit amount and (2)
the qualified natural gas production that is
attributable to the taxpayer.
Section 45I(c)(1) provides that “qual-
ified natural gas production” means
domestic natural gas produced from a
qualified marginal well. Section 45I(c)(3)
(A) provides that a qualified marginal well
is a domestic well (i) the production from
which during the taxable year is treated as
marginal production under § 613A(c)(6),
or (ii) which, during the taxable year (I)
has average production of not more than
25 barrel-of-oil equivalents per day, and
(II) produces water at a rate not less than
95 percent of total well effluent.
Section 613A(c)(6)(D) and (E) pro-
vide that “marginal production” means
domestic natural gas produced during
any taxable year from a property which
is a stripper well property for the calendar
year in which the taxable year begins. A
“stripper well property” is, with respect to
any calendar year, any property producing
not more than 15 barrel equivalents per
day, determined by dividing the average
daily production of domestic crude oil
and domestic natural gas from producing
wells on the property for such calendar
year by the number of such wells.
Section 45I(c)(2)(A) provides that
generally only the first 1,095 barrels or
barrel-of-oil equivalents (as defined in
§ 45K(d)(5)) produced during the taxable
year qualify for the MWC. This limitation
is proportionately reduced in the case of a
short taxable year or in the case of a well
that is not capable of production each day
of a taxable year. See § 45I(c)(2)(B). The
number of wells on which a taxpayer may
claim the MWC is not limited.
Section 45I(d)(2) provides that to claim
the credit a taxpayer must hold an operat-
ing interest in the qualified marginal well
producing the natural gas to which the
credit relates. Under § 45I(d)(1) if a well
is owned by more than one owner and the
natural gas production exceeds the lim-
itation under § 45I(c)(2), the qualifying
natural gas production attributable to the
taxpayer is determined on the basis of the
ratio which the taxpayer’s revenue interest
in the production bears to the aggregate
of the revenue interests of all operating
interest owners in the production. Finally,
§ 45I(d)(3) provides that the MWC is not
allowable if the taxpayer is also eligible to
claim the § 45K nonconventional sources
credit for the taxable year, unless the tax-
payer elects not to claim the credit under
§ 45K for the well.
For purposes of § 45I(a)(1), the credit
amount is 50 cents (adjusted for inflation)
per Mcf of qualified natural gas produc-
tion (tentative credit amount). See § 45I(b)
(1)(B) and (b)(2)(B).
Section 45I(b)(2)(A) and (B) provide
that the tentative credit amount (adjusted
for inflation) is reduced (but not below
zero) to the extent that the applicable
reference price exceeds $1.67 (adjusted
for inflation). More specifically, § 45I(b)
(2)(A) provides that the tentative credit
amount (adjusted for inflation) is reduced
by an amount which bears the same ratio
to the tentative credit amount (adjusted
for inflation) as the excess (if any) of
the applicable reference price over $1.67
(adjusted for inflation), bears to $0.33
(adjusted for inflation). As a result, the
MWC is not available if the applicable
reference price for qualified natural gas
production is $2.00 (adjusted for inflation)
or more.
Section 45I(b)(2)(A) also provides that
the applicable reference price for a taxable
year is the reference price for the calendar
year preceding the calendar year in which
the taxable year begins. Section 45I(b)(2)
(C)(ii) provides that the term “reference
price” means, with respect to any calendar
year, in the case of qualified natural gas
production, the Secretary’s estimate of the
annual average wellhead price per Mcf for
all domestic natural gas.
Section 45I(b)(2)(B) provides that in
the case of any taxable year beginning in a
calendar year after 2005, each of the dollar
amounts contained in § 45I(b)(2)(A) will
be increased to an amount equal to such
dollar amount multiplied by the inflation
adjustment factor for such calendar year
(determined under § 43(b)(3)(B) by sub-
stituting “2004” for “1990”).
SECTION 3. INFLATION
ADJUSTMENT FACTOR AND
REFERENCE PRICE
.1 Inflation Adjustment. The inflation
adjustment factor under § 45I(b)(2)(B) for
calendar year 2023 is 1.4993.
.2 Reference Price. The Secretary’s
estimate of the calendar year 2022 annual
average wellhead price per Mcf for all
domestic natural gas under § 45I(b)(2)
(C)(ii) was calculated by applying the
Producer Price Index commodity index
for “Natural Gas from the Wellhead”
(WPU053101051)
1
published by the
1
https://data.bls.gov/cgi-bin/srgate. The BLS publishes indexes and not actual or average prices.

August 21, 2023 564 Bulletin No. 2023–34
Bureau of Labor Statistics (BLS) as part
of its Producer Price Index program, to
the 2021 annual average wellhead price
($3.43) published in Notice 2023-41,
2023-23 I.R.B. 905. The annual Producer
Price Index commodity index for natural
gas published by the BLS was 106.8 in
2021 and 173.206 in 2022, which implies
a ratio of 2022 to 2021 average well-
head prices of 1.622 (173.206/106.801).
Therefore, the Secretary’s estimate of the
calendar year 2022 annual average well-
head price per Mcf for all domestic nat-
ural gas is $5.57 per Mcf (1.622 × $3.43
per Mcf). The one cent difference is due
to rounding.
For years after 2022, the Secretary
intends to continue calculating the
reference price by application of the
Producer Price Index commodity index
for “Natural Gas from the Wellhead”
(WPU053101051) published by the BLS
to the previous year’s reference price.
SECTION 4. CALCULATION OF
CREDIT AMOUNT
Under § 45I(b)(1)(B) and (2)(B), the
tentative credit amount used to calculate
the MWC for taxable years beginning
in calendar year 2023 is $0.75 per Mcf
($0.50 × 1.4993 inflation adjustment
factor). Pursuant to the reduction spec-
ified in § 45I(b)(2)(A), the tentative
credit amount for taxable years begin-
ning in calendar year 2023 is reduced to
zero.
Specifically, pursuant § 45I(b)(2)(A),
the tentative credit amount is reduced
(but not below zero) by an amount (the
Reduction Amount) which bears the same
ratio to such amount as (i) the excess (if
any) of the applicable reference price over
$2.50 ($1.67 × 1.4993 inflation adjust-
ment factor), bears to (ii) $0.49 ($0.33 ×
1.4993 inflation adjustment factor). The
Reduction Amount (as adjusted for infla-
tion) is computed as follows:
ReductionAmount
Tentative Credit Amount
Applicable Referenc
=
ee Price
Reduction Amount
−
=
−
$.
$.
$.
$.$.
$.
250
049
075
557250
049
The Reduction Amount is $4.70
(($5.57 - $2.50) ÷ $0.49 × $0.75) and
it exceeds the tentative credit amount
($0.75). Therefore, the credit amount used
to calculate the MWC for taxable years
beginning in calendar year 2023 is $0.00
per Mcf.
SECTION 5. EFFECTIVE DATE
This notice is effective for qualified
natural gas production during taxable
years beginning in calendar year 2023.
SECTION 6. DRAFTING AND
CONTACT INFORMATION
The principal author of this notice is
Boris Kukso of the Office of Associate
Chief Counsel (Passthroughs & Special
Industries). For further information
regarding this notice contact Mr. Kukso at
(202) 317-6853 (not a toll-free number).
Guidance on Requirements
for Home Energy Audits
for Purposes of the
Energy Efficient Home
Improvement Credit under
Section 25C
Notice 2023-59
SECTION 1. PURPOSE
This notice announces that the
Department of the Treasury (the Treasury
Department) and the Internal Revenue
Service (IRS) intend to propose regula-
tions (forthcoming proposed regulations)
addressing the requirements for home
energy audits with respect to the energy
efficient home improvement credit under
§ 25C of the Internal Revenue Code
(Code),
1
as amended by § 13301 of Public
Law 117-169, 136. Stat. 1818 (August 16,
2022), commonly known as the Inflation
Reduction Act of 2022 (IRA). Sections
2 and 3 of this notice provide relevant
background and definitions, respectively,
with respect to the energy efficient home
improvement credit allowed under § 25C
(§ 25C credit). Section 4 of this notice
specifies the requirements that the forth-
coming proposed regulations would set
forth for qualifying as a home energy
auditor for purposes of the § 25C credit.
Sections 5 and 6 of this notice specify the
substantiation requirement and transition
rule, respectively, that the forthcoming
proposed regulations would establish for
taxpayers claiming the § 25C credit with
respect to home energy audits. Section 7
addresses the application of the Paperwork
Reduction Act to this notice. The Treasury
Department and the IRS also intend to
propose that the forthcoming proposed
regulations would apply to taxable years
ending after December 31, 2022. Until the
issuance of the forthcoming proposed reg-
ulations, taxpayers may rely on the rules
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

Bulletin No. 2023–34 565 August 21, 2023
described in sections 3 through 6 of this
notice.
SECTION 2. BACKGROUND
.01 Energy Efficient Home Improvement
Credit
Section 25C was originally enacted
by § 1333(a) of the Energy Policy Act
of 2005, Pub. L. 109-58, 119 Stat. 594,
1026 (August 8, 2005), to provide a tax
credit for the purchase and installation of
certain energy efficient improvements in
taxpayers’ principal residences. Congress
has amended § 25C several times since its
original enactment, most recently under
§ 13301 of the IRA, which renamed this
provision the “energy efficient home
improvement credit” and provided that
§ 25C, as amended by the IRA, applies to
property placed in service prior to January
1, 2033.
Section 13301(b) and (f) of the IRA
amended § 25C(a) to allow a credit
amount equal to 30 percent of the sum
of the amounts that individual taxpayers
pay or incur during a taxable year for (1)
qualified energy efficiency improvements
installed during the year, (2) residential
energy property expenditures, and (3)
home energy audits.
As amended by § 13301(c) of the
IRA, the § 25C credit is generally limited
to an annual cap of $1,200. Within this
$1,200 limitation, § 25C(b) sets forth fur-
ther annual caps for certain categories of
improvements. The caps and categories of
improvements under these limitations are
as follows: $600 for any item of qualified
energy property, as defined in § 25C(d)
(2); $600 for exterior windows and sky-
lights; $250 for any single exterior door
and $500 in the aggregate for all exterior
doors; and $150 for home energy audits.
Section 25C(b) also provides that residen-
tial energy property expenditures for heat
pumps, heat pump water heaters, biomass
stoves, and biomass boilers are not subject
to the annual cap of $1,200 or to the $600
limitation for any item of qualified energy
property. Instead, residential energy
property expenditures for these items are
subject to a separate aggregate annual lim-
itation of $2,000. Section 25C(d) provides
that the term “residential energy property
expenditures” includes expenditures for
labor costs properly allocable to the onsite
preparation, assembly, or original installa-
tion of the property.
.02 Credit for Home Energy Audit
Expenditures
Section 13301(f) of the IRA amended
§ 25C to expand the types of expenditures
eligible for the § 25C credit to include
expenditures for home energy audits.
Section 25C(e) defines the term “home
energy audit” as an inspection and writ-
ten report with respect to a dwelling unit
located in the United States and owned
or used by the taxpayer as the taxpayer’s
principal residence (within the meaning
of § 121). The audit must (1) identify the
most significant and cost-effective energy
efficiency improvements with respect
to such dwelling unit, including an esti-
mate of the energy and cost savings with
respect to each such improvement, and
(2) be conducted and prepared by a home
energy auditor that meets the certifica-
tion or other requirements specified by
the Secretary of the Treasury or her del-
egate (Secretary) in regulations or other
guidance. The IRA also imposed two lim-
itations on this credit. First, as described
above, § 25C(b)(6)(A) limits the credit
allowed for amounts paid or incurred by
the taxpayer during the taxable year for
home energy audits up to $150. Under
this limit, for example, a taxpayer that
pays $1000 for a home energy audit
during the taxable year may only claim a
$150 credit for such taxable year for this
expenditure, and not the full 30 percent of
the amount of the expenditure, even if the
taxpayer does not have any other expen-
ditures eligible for the § 25C credit during
the taxable year. Second, § 25C(b)(6)(B)
imposes a substantiation requirement,
requiring taxpayers claiming the credit to
include with their tax returns “such infor-
mation or documentation as the Secretary
may require”.
In Notice 2022-48, 2022-43 I.R.B.
305, the Treasury Department and the IRS
requested comments on various questions
arising from the IRA’s energy efficiency
provisions. Among other questions, the
notice requested comments on what certi-
fication or other requirements the Treasury
Department and the IRS should require
for home energy auditors that conduct the
inspection and provide the written report
that constitutes a “home energy audit” that
qualifies for the § 25C credit.
The Treasury Department and the IRS
published a Fact Sheet (FS-2022-40) on
December 22, 2022, addressing “fre-
quently asked questions about energy
efficient home improvements and resi-
dential clean energy property credits.”
This Fact Sheet provides that a quali-
fying home energy audit “must include
an inspection of a dwelling, including
condominiums and certain manufactured
homes, located in the United States that
is owned or used by the taxpayer as the
taxpayer’s principal residence. The home
energy auditor must provide a written
report (to the taxpayer) that identifies the
most significant and cost-effective energy
efficiency improvements for that dwell-
ing, including an estimate of the energy
and cost savings for each such improve-
ment. The auditor must meet the certifi-
cation or other requirements specified by
the Department of the Treasury and the
Internal Revenue Service in forthcoming
guidance.” The Fact Sheet also clarifies
that the § 25C credit with respect to home
energy audits may be claimed by a tax-
payer renting a home as their principal
residence provided such home is located
in the United States.
SECTION 3. DEFINITIONS
.01 Home Energy Audit Credit. The
term “Home Energy Audit Credit” means
the § 25C credit allowed to individuals by
reason of § 25C(a)(3) equal to 30 percent
of the amount paid or incurred for Home
Energy Audits in the taxable year, up to
$150 per taxable year.
.02 Home Energy Audit. The term
“Home Energy Audit” means an inspec-
tion and written report (audit) with respect
to a dwelling unit located in the United
States and owned or used by the taxpayer
as the taxpayer’s principal residence
(within the meaning of § 121) that meets
each of the following requirements.
(1) The audit identifies the most sig-
nificant and cost-effective energy effi-
ciency improvements with respect to such
dwelling unit, including an estimate of the
energy and cost savings with respect to
each such improvement,
(2) The inspection is conducted either
by a Qualified Home Energy Auditor or
under the supervision of a Qualified Home
Energy Auditor,

August 21, 2023 566 Bulletin No. 2023–34
(3) The written report is prepared
and signed by a Qualified Home Energy
Auditor, and
(4) The audit is consistent with the
most recent Department of Energy
(DOE)-led and industry-validated Jobs
Task Analysis.
2
.03 Qualified Home Energy Auditor.
The term “Qualified Home Energy
Auditor” means an individual who is a
home energy auditor that is certified by
a Qualified Certification Program at the
time of the Home Energy Audit.
.04 Qualified Certification Program.
The term “Qualified Certification
Program” means a certification program
described in section 4.03 of this notice.
SECTION 4. CERTIFICATIONS
AND OTHER REQUIREMENTS
FOR QUALIFIED HOME ENERGY
AUDITORS.
.01 In General. Except as otherwise
provided in section 6 of this notice, the
forthcoming proposed regulations would
provide that a taxpayer may claim the
Home Energy Audit Credit for a taxable
year only if the taxpayer pays or incurs
amounts for a Home Energy Audit.
.02 Written Report. The forthcoming
proposed regulations would require the
Qualified Home Energy Auditor to pro-
vide the following information in the writ-
ten report:
(1) The Qualified Home Energy
Auditor’s name and the relevant employer
identification number (EIN) or other type
of relevant taxpayer identifying num-
ber as referenced in § 301.6109-1(a)(1)
(i) of the Procedure and Administration
Regulations (26 CFR part 301) in lieu of
an EIN,
3
(2) An attestation that the Qualified
Home Energy Auditor is certified by a
Qualified Certification Program, and
(3) The name of such Qualified
Certification Program.
.03 Qualified Certification Program. A
Qualified Certification Program is a certi-
fication program that satisfies the criteria
described in section 4.03(1) and (2) of this
notice for certifying home energy auditors
and that is included in the list described in
section 4.04 of this notice.
(1) The certification program must be
reviewed and evaluated through the most
recent DOE-led and industry-validated
Jobs Task Analysis,

demonstrating sub-
stantial alignment with key duties, tasks,
knowledge, skills, and abilities of home
energy auditors.
(2) The certification program must sat-
isfy one of following standards develop-
ment processes:
(a) The credentials are developed and
maintained in accordance with indus-
try standards using criteria such as those
cited in the Department of Labor (DOL)
Training and Employment Notice No.
25-19
4
, Attachment I, section b., or the
most recent guidance from DOL on char-
acteristics of credentials; or
(b) The program is accredited by the
American National Standards Institute
(ANSI), International Accreditation
Service, or other qualified accreditation
bodies that are in compliance with ISO/
IEC 17024:2012, Conformity assessment
– General requirements for bodies operat-
ing certification of persons.
.04 Qualified Certification Programs
List. The list of Qualified Certification
Programs is maintained by the DOE at
the following web address: https://www.
energy.gov/eere/buildings/25c-energy-
efficient-home-improvement-credit. The
listed Qualified Certification Programs
are the exclusive certification programs
through which an auditor can qualify as a
Qualified Home Energy Auditor, and that
will allow a taxpayer to claim the Home
Energy Audit Credit. DOE intends to
update the list on a rolling basis as it iden-
tifies additional Qualified Certification
Programs.
SECTION 5. SUBSTANTIATION
REQUIREMENT
The forthcoming proposed regulations
would provide that taxpayers claiming
the Home Energy Audit Credit would
be in compliance with the substantiation
requirement under § 25C(b)(6)(B) if they
(1) maintain the written report signed by
the Qualified Home Energy Auditor as
a record, pursuant to the general record-
keeping and retention requirements under
§ 6001 and §1.6001-1, and (2) comply
with the instructions for Form 5695,
Residential Energy Credits, or any succes-
sor form required by the IRS.
SECTION 6. TRANSITION RULE
With respect to home energy audits
conducted during taxable years ending
after December 31, 2022, and conducted
on or before December 31, 2023, a home
energy auditor is not required to be a
Qualified Home Energy Auditor as defined
in section 3.03 of this notice. Therefore,
taxpayers that paid or incurred expenses
for a home energy audit that meets the
requirements of § 25C, and that was con-
ducted during taxable years ending after
December 31, 2022, and conducted on or
before December 31, 2023, may claim a
Home Energy Audit Credit for such audit
even if the auditor who conducted the
home energy audit was not a Qualified
Home Energy Auditor, as defined in sec-
tion 3.03 of this notice, at the time of the
home energy audit. However, taxpay-
ers may not claim a Home Energy Audit
Credit for home energy audits conducted
after December 31, 2023, that were not
conducted by a Qualified Home Energy
Auditor.
SECTION 7. PAPERWORK
REDUCTION ACT
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (“PRA”) generally
requires that a federal agency obtain the
approval of the Office of Management
and Budget (OMB) before collecting
information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or
2
The Single-Family Energy Auditor Job Task Analysis and a Multifamily Energy Auditor Job/Task Analysis and Report were developed by the National Renewable Energy Laboratory. Public
comment informed the development of these documents. See Workforce Guidelines for Home Energy Upgrades, 75 FR 68781 (Nov. 9, 2010), available at: https://www.federalregister.gov/
documents/2010/11/09/2010-28289/workforce-guidelines-for-home-energy-upgrades.
3
If the Qualified Home Energy Auditor is acting in his or her capacity as a partner in a partnership, or as an employee of any person, whether an individual, corporation, or partnership, the
relevant EIN is the EIN of the partnership or the person who employs the Qualified Home Energy Auditor.
4
Employment & Training Administration Training and Employment Notice No. 25-19 (Jun. 08, 2020) available at: https://www.dol.gov/agencies/eta/advisories/training-and-employment-
notice-no-25-19.

Bulletin No. 2023–34 567 August 21, 2023
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information dis-
plays a valid OMB control number.
The collection of information con-
tained in this notice includes recordkeep-
ing requirements, as detailed in section
5 of this notice. These recordkeeping
requirements are approved by OMB under
1545-0074.
Additionally, the notice includes a
third-party disclosure requirement for
Qualified Home Energy Auditors to
provide a written report (to the taxpayer)
that identifies the most significant and
cost-effective energy efficiency improve-
ments for that dwelling, including an
estimate of the energy and cost savings
for each such improvement. The disclo-
sure of these reports is considered a usual
and customary business practice provided
during the normal course of business in
conducting a Home Energy Audit. This
customary business practice imposes no
additional burden on respondents.
SECTION 8. CONTACT
INFORMATION
The principal author of this notice is
the Office of Associate Chief Counsel
(Passthroughs & Special Industries).
For further information regarding this
notice contact the Office of Associate
Chief Counsel (Passthroughs & Special
Industries) at (202) 317-6853 (not a toll-
free number).

August 21, 2023 568 Bulletin No. 2023–34
Part IV
Announcement of
Disciplinary Sanctions
From the Office of
Professional Responsibility
Announcement 2023-23
The Office of Professional
Responsibility (OPR) announces
recent disciplinary sanctions involv-
ing attorneys, certified public accoun-
tants, enrolled agents, enrolled
actuaries, enrolled retirement plan
agents, appraisers, and unenrolled/
unlicensed return preparers (individ-
uals who are not enrolled to practice
and are not licensed as attorneys or
certified public accountants). Licensed
or enrolled practitioners are subject
to the regulations governing practice
before the Internal Revenue Service
(IRS), which are set out in Title 31,
Code of Federal Regulations, Subtitle
A, Part 10, and which are released as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations. Unenrolled/
unlicensed return preparers are subject
to Revenue Procedure 81-38 and super-
seding guidance in Revenue Procedure
2014-42, which govern a preparer’s eli-
gibility to represent taxpayers before the
IRS in examinations of tax returns the
preparer both prepared for the taxpayer
and signed as the preparer. Additionally,
unenrolled/unlicensed return prepar-
ers who voluntarily participate in the
Annual Filing Season Program under
Revenue Procedure 2014-42 agree to be
subject to the duties and restrictions in
Circular 230, including the restrictions
on incompetent or disreputable conduct.
The disciplinary sanctions to be
imposed for violation of the applicable
standards are:
Disbarred from practice before the
IRS—An individual who is disbarred
is not eligible to practice before the IRS
as defined at 31 C.F.R. § 10.2(a)(4) for a
minimum period of five (5) years.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to practice before the IRS as
defined at 31 C.F.R. § 10.2(a)(4) during
the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand.
Unlike disbarment or suspension, censure
does not affect an individual’s eligibility
to practice before the IRS, but OPR may
subject the individual’s future practice
rights to conditions designed to promote
high standards of conduct.
Monetary penalty—A monetary pen-
alty may be imposed on an individual who
engages in conduct subject to sanction,
or on an employer, firm, or entity if the
individual was acting on its behalf and it
knew, or reasonably should have known,
of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Ineligible for limited practice—An
unenrolled/unlicensed return preparer
who fails to comply with the requirements
in Revenue Procedure 81-38 or to comply
with Circular 230 as required by Revenue
Procedure 2014-42 may be determined
ineligible to engage in limited practice as
a representative of any taxpayer.
Under the regulations, individuals
subject to Circular 230 may not assist, or
accept assistance from, individuals who
are suspended or disbarred with respect
to matters constituting practice (i.e., rep-
resentation) before the IRS, and they may
not aid or abet suspended or disbarred
individuals to practice before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision, Suspended
by decision, Censured by decision,
Monetary penalty imposed by decision,
and Disqualified after hearing—An
administrative law judge (ALJ) issued a
decision imposing one of these sanctions
after the ALJ either (1) granted the gov-
ernment’s summary judgment motion
or (2) conducted an evidentiary hearing
upon OPR’s complaint alleging violation
of the regulations. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision becomes the
final agency decision.
Disbarred by default decision,
Suspended by default decision,
Censured by default decision, Monetary
penalty imposed by default decision,
and Disqualified by default decision—
An ALJ, after finding that no answer to
OPR’s complaint was filed, granted OPR’s
motion for a default judgment and issued a
decision imposing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal,
Censured by decision on appeal,
Monetary penalty imposed by decision
on appeal, and Disqualified by decision
on appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended
by consent, Censured by consent,
Monetary penalty imposed by consent,
and Disqualified by consent—In lieu of
a disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer of
consent will provide for: suspension for
an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportu-
nity, after a stated number of months, to
file with OPR a petition for reinstatement
affirming compliance with the terms of
the consent and affirming current fitness
and eligibility to practice (i.e., an active
professional license or active enrollment
status, with no intervening violations of
the regulations).
Suspended indefinitely by decision in
expedited proceeding, Suspended indef-
initely by default decision in expedited
proceeding, Suspended by consent in
expedited proceeding—OPR instituted
an expedited proceeding for suspension
(based on certain limited grounds, includ-
ing loss of a professional license for cause,
and criminal convictions).
Determined ineligible for lim-
ited practice—There has been a final

Bulletin No. 2023–34 569 August 21, 2023
determination that an unenrolled/unli-
censed return preparer is not eligible for
limited representation of any taxpayer
because the preparer violated standards of
conduct or failed to comply with any of
the requirements to act as a representative.
A practitioner who has been disbarred
or suspended under 31 C.F.R. § 10.60, or
suspended under § 10.82, or a disqualified
appraiser may petition for reinstatement
before the IRS after the expiration of 5
years following such disbarment, suspen-
sion, or disqualification (or immediately
following the expiration of the suspension
or disqualification period if shorter than 5
years). Reinstatement will not be granted
unless the IRS is satisfied that the peti-
tioner is not likely to engage thereafter in
conduct contrary to Circular 230, and that
granting such reinstatement would not be
contrary to the public interest.
Reinstatement decisions are published
at the individual’s request, and described
in these terms:
Reinstated to practice before the
IRS—The individual’s petition for
reinstatement has been granted. The
agent, and eligible to practice before the
IRS, or in the case of an appraiser, the
individual is no longer disqualified.
Reinstated to engage in limited prac-
tice before the IRS—The individual’s
petition for reinstatement has been granted.
The individual is an unenrolled/unlicensed
return preparer and eligible to engage in
limited practice before the IRS, subject to
requirements the IRS has prescribed for
limited practice by tax return preparers.
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a final
decision; (2) the individual has settled a
disciplinary case by signing OPR’s “con-
sent to sanction” agreement admitting to
one or more violations of the regulations
and consenting to the disclosure of the
admitted violations (for example, failure
to file Federal income tax returns, lack of
due diligence, conflict of interest, etc.); (3)
OPR has issued a decision in an expedited
proceeding for indefinite suspension; or
(4) OPR has made a final determination
(including any decision on appeal) that an
unenrolled/unlicensed return preparer is
ineligible to represent any taxpayer before
the IRS.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue
Bulletin at the earliest practicable date.
The sanctions announced below are alpha-
betized first by state and second by the last
names of the sanctioned individuals.
City & State
NameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Alabama
Sumner, Elizabeth, see
Mississippi
Arizona
GoodyearPlimley, Rise H.Enrolled AgentSuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 30, 2023
California
LarkspurBlecka, John C.C PAReinstated to practice
before the IRS, effective
04/19/2023
Colorado
ErieDevaney, Cathleen A.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 30, 2023
Illinois
KingstonJensen, Cynthia (Cyndi)C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 30, 2023
Louisiana
Baton RougeTriche, Wayne A.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
June 6, 2023
Maryland
BaltimoreDailey, Mitzi E.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 3, 2023

August 21, 2023 570 Bulletin No. 2023–34
City & State
NameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Massachusetts
WrenthamHubbell, Scott C.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 30, 2023
Mississippi
MeridianSumner, Elizabeth R.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
June 27, 2023
New Hampshire
ManchesterDunn, David C.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
June 21, 2023
North Carolina
CharlotteCaviness, Elizabeth J.AttorneySuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
June 21, 2023
James, Andre, see Virginia
LexingtonRives, II, Leon L.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
June 27, 2023
Virginia
FairfaxJames, AndreC PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
April 17, 2023
Washington
BellevueShimizu, Steven G.C PASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
May 30, 2023

Bulletin No. 2023–34 571 August 21, 2023
Notice of Proposed
Rulemaking
Revising Consolidated
Return Regulations to
Reflect Statutory Changes,
Modernize Language, and
Enhance Clarity
REG-134420-10
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing; withdrawal of notices of proposed
rulemaking; partial withdrawal of notices
of proposed rulemaking; and proposed
withdrawal of temporary regulations.
SUMMARY: This document contains
proposed amendments to regulations
applicable to affiliated groups of cor-
porations that file consolidated Federal
income tax returns. The proposed regu-
lations would modify those regulations to
reflect statutory changes, update language
to remove antiquated or regressive termi-
nology, and enhance clarity. Additionally,
this document partially or completely
withdraws certain notices of proposed
rulemaking and proposes to withdraw cer-
tain temporary regulations. The proposed
regulations would affect corporations fil-
ing consolidated returns.
DATES: As of August 7, 2023, the
notices of proposed rulemaking pub-
lished on November 14, 2001 (66 FR
57021), March 12, 2002 (67 FR 11070),
May 31, 2002 (67 FR 38039), May 31,
2002 (67 FR 38040), March 14, 2003 (68
FR 12324), May 7, 2003 (68 FR 24404),
March 18, 2004 (69 FR 12811), August
18, 2004 (69 FR 51209), August 26, 2004
(69 FR 52462), April 10, 2007 (72 FR
17814), and June 23, 2010 (75 FR 35710)
are withdrawn. As of August 7, 2023, the
notices of proposed rulemaking published
on December 30, 1992 (57 FR 62251-
01), March 18, 2004 (69 FR 12281), and
June 11, 2015 (80 FR 33211) are partially
withdrawn (see SUPPLEMENTARY
INFORMATION for specific details).
Written or electronic comments as well
as requests for a public hearing must be
received by November 6, 2023. Requests
for a public hearing must be submitted
as prescribed in the “Comments and
Requests for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-134420-10). Once submit-
ted to the Federal eRulemaking Portal,
comments cannot be edited or withdrawn.
The Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comment submit-
ted to its public docket.
Send paper submissions to:
CC:PA:LPD:PR (REG-134420-10),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, William W. Burhop at (202)
317-5363 or Kelton P. Frye at (202) 317-
5135 (not toll-free numbers); concern-
ing the submission of comments and/
or requests for a public hearing, Vivian
Hayes by email at publichearings@irs.
gov or by phone at (202) 317-5306 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This notice of proposed rulemaking
(NPRM) contains proposed regulations
under sections 1502, 1503, 1552, and
1563 of the Internal Revenue Code of
1986 (Code). These proposed regulations
primarily would revise the Income Tax
Regulations (26 CFR part 1) under section
1502 (consolidated return regulations).
Section 1502 authorizes the Secretary
of the Treasury or the Secretary’s del-
egate (Secretary) to prescribe consoli-
dated return regulations for an affiliated
group of corporations that join in filing
(or that are required to join in filing) a
consolidated return (consolidated group)
to clearly reflect the Federal income tax
liability of the consolidated group and to
prevent avoidance of such tax liability.
See §1.1502-1(h) (defining the term “con-
solidated group”). For purposes of carry-
ing out those objectives, section 1502 also
permits the Secretary to prescribe rules
that may be different from the provisions
of chapter 1 of the Code (chapter 1) that
would apply if the corporations compos-
ing the consolidated group filed separate
returns. Terms used in the consolidated
return regulations generally are defined in
§1.1502-1.
The proposed regulations also would
revise or propose to remove other reg-
ulations under the Code. These regula-
tions are set forth in (i) the Income Tax
Regulations (26 CFR part 1), (ii) the
Temporary Income Tax Regulations under
the Revenue Act of 1978 (26 CFR part
5), (iii) the Regulations on Procedure and
Administration (26 CFR part 301), and
(iv) the OMB Control Numbers under the
Paperwork Reduction Act Regulations (26
CFR part 602).
Explanation of Provisions
I. Overview
In this NPRM, the Treasury Department
and the IRS have proposed revisions to the
consolidated return regulations to (i) elim-
inate obsolete or otherwise outdated pro-
visions, (ii) modernize the language and
improve the clarity of the regulations, and
(iii) facilitate taxpayer compliance. As
an initial matter, the proposed regulations
would update the consolidated return reg-
ulations to reflect statutory changes made
by legislation enacted during the last
50-plus years and remove consolidated
return regulations that have no practical
applicability to taxpayers. The proposed
regulations also would revise the con-
solidated return regulations to eliminate
obsolete or otherwise incorrect terms and
cross-references. Lastly, the proposed
regulations generally would remove tran-
sition rules for transactions occurring in
or before 2009 because the taxable years
affected by such transition rules generally
are closed and the rules have no practical
applicability to taxpayers.
The proposed regulations also would
update the consolidated return regula-
tions and the regulations under section

August 21, 2023 572 Bulletin No. 2023–34
1563 to eliminate antiquated or regres-
sive terminology. For example, the
proposed regulations would replace all
gender-specific pronouns and other iden-
tifiers in the consolidated return regula-
tions with gender-neutral pronouns and
identifiers. The proposed regulations
also would revise the consolidated reg-
ulations to identify (i) American Samoa,
(ii) the Commonwealth of the Northern
Mariana Islands, (iii) the Commonwealth
of Puerto Rico, (iv) Guam, and (v) the
U.S. Virgin Islands as “territories” of
the United States rather than “posses-
sions.” Each of those jurisdictions has
its own government and its own tax
system. These revisions are consistent
with, and in furtherance of, the Treasury
Department’s Equity Action Plan, as well
as Executive Order 13985 of January
20, 2021, Advancing Racial Equity and
Support for Underserved Communities
Through the Federal Government, 86 FR
7009 (January 25, 2021).
The proposed regulations also with-
draw or partially withdraw numerous
NPRMs. These NPRMs include: (i)
NPRMs that are incorporated, in revised
form, into these proposed regulations or
that were incorporated into final regula-
tions in revised form; (ii) a NPRM that
became obsolete when proposed regula-
tions provided in a subsequent, discrete
NPRM were adopted as final regula-
tions; and (iii) NPRMs that cross-refer-
enced temporary regulations (the text of
which served as the text for those pro-
posals) that were removed, have expired,
or otherwise have become obsolete.
Additionally, the proposed regulations
propose to withdraw temporary regu-
lations that (i) no longer have practical
applicability to taxpayers, or (ii) would
be replaced by final regulations proposed
by this document.
With regard to each provision of the
consolidated return regulations that these
proposed regulations would remove, the
Treasury Department and the IRS gener-
ally have proposed to reserve the affected
provision. This approach is intended solely
to avoid cascading changes to cross-refer-
ences throughout the consolidated return
regulations, thereby preserving historical
citations and reducing potential confusion
for taxpayers. Accordingly, the reserving
of those provisions does not indicate in any
manner that the Treasury Department and
the IRS are studying, or intend to study,
any of the one or more topics addressed by
the reserved provision.
Lastly, the proposed regulations
would remove numerous provisions that
cross-reference prior-law editions of
the Code of Federal Regulations (CFR).
Following adoption of the proposed regu-
lations as final regulations, taxpayers may
consult the CFR for a particular year to
determine the rules applicable to that year.
The Treasury Department and the IRS
request comments on whether any aspect
of the proposed regulations would effec-
tuate a substantive revision of the con-
solidated return regulations, as opposed
to a mere update or similar modification.
Additionally, comments are requested
on whether any provision proposed to
be removed or revised by this document
should be retained in its form as of August
4, 2023. Lastly, the Treasury Department
and the IRS request comments identifying
any other provision of the consolidated
return regulations that should be revised
consistent with the scope of the proposed
regulations, such as additional provisions
of the consolidated return regulations that
are obsolete or otherwise outdated.
II. Summary of Proposed Changes
A. Removal of regulations that implement
repealed statutory provisions
The proposed regulations would
remove provisions of the consolidated
return regulations that have been rendered
obsolete by enacted legislation.
1. Section 1.1502-1 (definitions)
Sections 1.1502-1(f)(2) and (3) cur-
rently reference section 1562 of the
Internal Revenue Code of 1954 (1954
Code), which allowed controlled groups
of corporations (as defined in section
1563(a) of the 1954 Code) to elect mul-
tiple surtax exemptions. Section 1562
of the 1954 Code was repealed by sec-
tion 401(a)(2) of the Tax Reform Act of
1969, Public Law 91-172, 83 Stat. 487
(December 30, 1969). The proposed reg-
ulations would remove from §1.1502-1(f)
(2) and (3) all references to section 1562
of the 1954 Code.
2. Section 1.1502-11 (consolidated
taxable income)
The proposed regulations would
remove §1.1502-11(a)(6), which provides
that consolidated taxable income for a
consolidated return year is determined
by taking into account any “consolidated
section 922 deduction.” Section 922 of
the 1954 Code (providing a deduction
for Western Hemisphere trade corpo-
rations) was repealed for taxable years
beginning after December 31, 1979, by
section 1052(b) of the Tax Reform Act of
1976, Public Law 94-455, 90 Stat. 1520
(October 4, 1976). In 1984, a subsequent
section 922 (relating to foreign sales cor-
porations) was added to the 1954 Code by
section 801(a) of the Deficit Reduction
Act of 1984, Public Law 98-369, 98 Stat.
494 (July 18, 1984), which defined the
term “FSC” for purposes of statutory
provisions regarding the taxation of for-
eign sales corporations. This subsequent
section 922 of the 1954 Code was redes-
ignated as section 922 of the Code (by
section 2(a) of the Tax Reform Act of
1986, Public Law 99-514, 100 Stat. 2085
(October 22, 1986)) before its repeal
by section 2 of the FSC Repeal and
Extraterritorial Income Exclusion Act
of 2000, Public Law 106-519, 114 Stat.
2423 (November 15, 2000). This repeal
applies to transactions after September
30, 2000. See section 5(a) of the FSC
Repeal and Extraterritorial Income
Exclusion Act of 2000.
The proposed regulations also would
revise §1.1502-11 to make other minor
updates. Specifically, the proposed regu-
lations would remove references to rules
applicable to taxable years beginning
before January 1, 1977, because those
rules no longer have practical applicabil-
ity to taxpayers. In addition, the proposed
regulations would remove references to
prior law regulations proposed to be with-
drawn by this document.
3. Section 1.1502-12 (separate taxable
income)
The proposed regulations would
remove §1.1502-12(m), which provides
that no deduction under now-repealed
section 922 of the 1954 Code is taken into
account in determining taxable income

Bulletin No. 2023–34 573 August 21, 2023
of separate corporations (that is, sepa-
rate taxable income). See part II.A.2 of
this Explanation of Provisions (describ-
ing the repeal of section 922 of the 1954
Code). The proposed regulations also
would revise §1.1502-12(n) to remove
references to section 244 of the Code,
which related to a special dividends-re-
ceived deduction (DRD) for dividends
received on certain preferred stock, and
former section 247 of the Code, which
related to a special DRD for dividends
paid on certain preferred stock of pub-
lic utilities. Sections 244 and 247 of the
Code were repealed by section 221(a)
(41)(A) of Division A of the Tax Increase
Prevention Act of 2014, Public Law 113-
295, 128 Stat. 4010 (December 19, 2014).
Although section 13821(b)(1) of Public
Law 115-97, 131 Stat. 2054 (December
22, 2017), commonly referred to as the
“Tax Cuts and Jobs Act” (TCJA), added
a new section 247 to the Code, that stat-
utory provision allows deductions for
certain contributions to Alaska Native
Settlement Trusts and therefore is not
applicable with regard to DRDs.
4. Section 1.1502-13 (intercompany
transactions)
The proposed regulations would revise
§1.1502-13(c)(5) to remove a reference to
section 595 of the Code, which provided
nonrecognition treatment for foreclosure
on property that secured the payment of
indebtedness. Section 595 of the Code
was repealed by section 1616(b)(8) of
the Small Business Jobs Protection Act of
1996, Public Law 104-188, 110 Stat. 1755
(August 20, 1996).
5. Section 1.1502-24 (consolidated
charitable contributions deduction)
Section 1.1502-24(a) sets forth a rule
to determine the amount of the consoli-
dated charitable contributions deduction
for a consolidated group. The proposed
regulations would revise §1.1502-24(c)
to remove the reference to section 242
of the 1954 Code, which allowed for a
deduction for partially tax-exempt inter-
est for C corporations. Section 242 of
the 1954 Code was repealed by section
1901(a)(33) of the Tax Reform Act of
1976.
6. Section 1.1502-26 (consolidated
dividends received deduction)
The proposed regulations would revise
§1.1502-26 by removing paragraphs (a)(2)
through (6) of that section, which provide
rules to calculate a consolidated DRD by
taking into account thrift institution mem-
bers of the group (including such members
that compute a deduction based on the
“percentage of taxable income method”
under section 593(b)(2) of the Code).
Section 1616(a) of the Small Business
Jobs Protection Act of 1996 added section
593(f) to the Code. Section 593(f) pro-
vides that sections 593(a) through (d) of
the Code do not apply to any taxable year
beginning after December 31, 1995.
7. Section 1.1502-27 (consolidated
section 247 deduction) and related
provisions
As discussed in part II.A.3 of this
Explanation of Provisions, (i) section
247 of the Code was repealed by section
221(a)(41)(A) of Division A of the Tax
Increase Prevention Act of 2014; and (ii)
section 13821(b)(1) of the TCJA added
to the Code a new section 247, which
allows deductions for certain contribu-
tions to Alaska Native Settlement Trusts.
Accordingly, the proposed regulations
would remove §1.1502-27, which pro-
vides rules under the version of section
247 of the Code repealed by the Tax
Increase Prevention Act of 2014. The pro-
posed regulations also would (i) remove
§1.1502-11(a)(8), which solely provides
a reference to a consolidated section 247
deduction computed under §1.1502-27,
and (ii) revise §§1.1502-24(c) and 1.1502-
43(b)(2)(iii), to remove a cross-reference
to §1.1502-27 in each respective section.
8. Section 1.1502-42 (consolidated
returns including thrift institutions) and
related provisions
The proposed regulations would
remove §1.1502-42, which provides
rules for members of a consolidated
group that are thrift institutions (that is,
any member that is described in section
593(a) of the Code). Section 1.1502-42
became obsolete as a result of the enact-
ment of section 593(f) of the Code by
section 1616(a) of the Small Business
Jobs Protection Act of 1996, which pro-
vides that sections 593(a) through (d) of
the Code do not apply to any taxable year
beginning after December 31, 1995. The
proposed regulations also would remove
§1.1502-12(q), which provides solely
that a thrift institution’s deduction under
section 593(b)(2) of the Code is deter-
mined under §1.1502-42.
9. Section 5.1502-45 (at-risk limitation
temporary regulations)
The Treasury Department and the IRS
published §5.1502-45 as temporary reg-
ulations relating to the application of the
at-risk limitations under section 465 of
the 1954 Code to corporations that join
with their subsidiaries in filing a consol-
idated return. See TD 7685, published in
the Federal Register (45 FR 16484) on
March 14, 1980 (at-risk limitation tempo-
rary regulations). Prior to the publication
of §5.1502-45, the Treasury Department
determined that consolidated groups were
actively considering transactions or plans
to avoid the at-risk limitations. See pre-
amble to the at-risk limitation temporary
regulations, 45 FR 16484. Under the tem-
porary regulations, if a parent meets the
stock ownership test for a personal hold-
ing company, a subsidiary’s loss from an
activity to which section 465 of the Code
(as redesignated by section 2(a) of the
Tax Reform Act of 1986) applies will be
allowed as a deduction on a consolidated
return only to the extent that the parent is
at risk in the activity of a subsidiary, under
the principles of section 465 of the Code,
as of the close of the subsidiary’s taxable
year. See id.
Section 5.1502-45(a)(4) refers to sec-
tion 465(c)(3)(D) of the 1954 Code, which
was repealed by section 503(a) of the
Tax Reform Act of 1986. The Treasury
Department and the IRS understand
that no proposed regulations ever were
published with regard to §5.1502-45.
Therefore, in addition to addressing the
reference to repealed section 465(c)(3)(D)
of the 1954 Code, this document proposes
the entire text of §5.1502-45 as proposed
§1.1502-45 and proposes to withdraw
§5.1502-45. The Treasury Department
and the IRS request comments on pro-
posed §1.1502-45.

August 21, 2023 574 Bulletin No. 2023–34
B. Updates to reflect amended statutory
provisions
The proposed regulations would
remove or revise regulations under section
1502 and other provisions of the Code that
implement statutory provisions that have
been substantially revised since those reg-
ulations were promulgated.
1. Section 1.167(c)-1 (limitations on
methods of computing depreciation under
section 167(b)(2), (3), and (4))
Section 1.167(c)-1(a)(5) provides a
reference to certain provisions of the
consolidated return regulations that
address depreciation of property received
by a member of an affiliated group from
another member of the group during a
consolidated return period. To implement
amendments made by the TCJA to sec-
tion 168(k) of the Code, the Department
of the Treasury and the Internal Revenue
Service published final regulations under
§1.1502-68 that provide guidance regard-
ing the additional first-year depreciation
deduction under section 168(k). See TD
9916, published in the Federal Register
(85 FR 71734) on November 10, 2020.
See also sections 12001(b)(13), 13201,
and 13204 of the TCJA. Accordingly,
the proposed regulations would revise
§1.167(c)-1(a)(5) to include a reference
to §1.1502-68.
2. Section 1.1502-1(g) (definition
of “consolidated return change of
ownership”)
The proposed regulations would
remove paragraph (g) of §1.1502-1, which
provides rules to determine the occurrence
of a consolidated return change of owner-
ship (CRCO). The CRCO rules generally
paralleled the ownership change rules of
section 382 of the 1954 Code, as that sec-
tion existed prior to enactment of the Tax
Reform Act of 1986. See preamble to the
NPRM published in the Federal Register
(56 FR 4228, 4232) on February 4, 1991.
Following the complete revision of section
382 of the 1954 Code by the Tax Reform
Act of 1986, the Treasury Department
and the IRS determined that the poli-
cies underlying the CRCO rules were
subsumed by the single-entity approach to
the application of section 382 of the Code
to consolidated groups. See section 621(a)
of the Tax Reform Act of 1986. See also
56 FR at 4232. Accordingly, the Treasury
Department and the IRS replaced the
CRCO rules with the consolidated section
382 rules set forth in §§1.1502-90 through
1.1502-99. See TD 8679, published in the
Federal Register (61 FR 33313) on June
27, 1996.
3. Section 1.1502-3 (consolidated tax
credits)
The proposed regulations would
remove §1.1502-3(e), which applies only
to a CRCO that occurred during a consol-
idated return year for which the due date
of the Federal income tax return (with-
out extensions) is on or before March 13,
1998. See §1.1502-3(e)(3).
4. Section 1.1502-5 (consolidated
estimated tax)
The Treasury Department and the
IRS published proposed regulations in
the Federal Register (57 FR 62251) on
December 30, 1992, regarding the com-
putation of the former alternative mini-
mum tax (Former AMT) by consolidated
groups and the allocation of related items
(consolidated Former AMT proposed
regulations). The proposed regulations
would incorporate in revised form part of
the consolidated Former AMT proposed
regulations that proposed to amend the
consolidated estimated tax provisions
in §1.1502-5. The Treasury Department
and the IRS received no comments on
§1.1502-5 as proposed in the consolidated
Former AMT proposed regulations.
The proposed regulations would revise
§1.1502-5 to reflect the amendments to
section 6655, which provides penalties
for corporations failing to pay estimated
income tax, made by section 10301(a) of
the Omnibus Budget Reconciliation Act of
1987, Public Law 100-203, 101 Stat. 1330
(December 22, 1987). The proposed reg-
ulations also would remove references to
section 6154 of the Code, which provided
special rules for installment payments
of estimated tax by corporations prior to
the repeal of section 6154 of the Code
by section 10301(b)(1) of the Omnibus
Budget Reconciliation Act of 1987, and
would add a reference to section 59A,
which was added to section 6655(g)(1) by
section 14401(d)(4)(A) of the TCJA.
The consolidated Former AMT pro-
posed regulations provided guidance on
consolidated estimated taxes under the
Former AMT in section 55 of the Code and
the environmental tax under former sec-
tion 59A of the Code. The Former AMT
was made inapplicable to corporations by
section 12001(a) of the TCJA, and former
section 59A of the Code was repealed
by section 221(a)(12)(A), Division A, of
the Tax Increase Prevention Act of 2014.
Current section 59A of the Code (as added
by section 14401(a) of the TCJA) imposes
the base erosion and anti-abuse tax, com-
monly referred to as the “BEAT.”
As a result of those amendments
to the Code, the proposed regulations
would make the following revisions to
§1.1502-5. First, the proposed regula-
tions would not incorporate provisions
from the consolidated Former AMT
proposed regulations that addressed
these issues. However, section 10101
of Public Law 117-169, 136 Stat. 1818
(August 16, 2022), commonly referred
to as the Inflation Reduction Act of
2022, amended section 55 of the Code
to impose a new corporate alternative
minimum tax based on adjusted financial
statement income. This new corporate
alternative minimum tax is commonly
referred to as the corporate alternative
minimum tax, or CAMT. Therefore, the
proposed regulations would modify the
definition of the term “tax” in §1.1502-
5(b)(5) to add a reference to section
55(a). In addition, the proposed regu-
lations would add a reference to section
59A (that is, the BEAT).
The Treasury Department and the
IRS are actively working on guidance to
implement the CAMT, including guid-
ance on the application of the CAMT to
consolidated groups. Accordingly, issues
regarding the substantive operation of the
CAMT will be addressed in that guid-
ance. However, these proposed regula-
tions would provide guidance regarding
the computation of consolidated estimated
taxes to take into account the CAMT lia-
bility of the consolidated group.

Bulletin No. 2023–34 575 August 21, 2023
5. Section 1.1502-9 (consolidated overall
foreign losses, separate limitation losses,
and overall domestic losses)
The proposed regulations would revise
§1.1502-9 to account for changes made
by final foreign tax credit regulations (TD
9882) published in the Federal Register
(84 FR 69022) on December 17, 2019.
The final foreign tax credit regulations pro-
vide guidance relating to the determination
of the foreign tax credit under the Code,
implementing statutory changes made by
the TCJA. In particular, the proposed reg-
ulations would revise §1.1502-9 to remove
references to the fair market value method
option for interest expense apportionment,
which was repealed by section 14502 of
the TCJA. Relatedly, the proposed regu-
lations would (1) update citations set forth
in §§1.1502-9(a) and 1.1502-9(c)(2)(ii)
and (iii), and (2) add a reference to §1.861-
13. In addition, the proposed regulations
would update an internal cross-reference in
§1.1502-9(b)(1).
6. Section 1.1502-12(g) (deductions
under section 167 of the 1954 Code) and
related provisions
Section 1.1502-12(g) was added to the
consolidated return regulations by final
regulations (TD 7246) published in the
Federal Register (38 FR 758) on January
4, 1973. Section 1.1502-12(g) provides
that, in the computation of the deduction
under section 167 of the 1954 Code, prop-
erty does not lose its character as new
property as a result of a transfer from
one member to another member during a
consolidated return year if certain condi-
tions are satisfied. Since the date of those
final regulations, extensive changes to the
depreciation rules of the Code have made
§1.1502-12(g) obsolete. See, for example,
section 201 of the Economic Recovery
Tax Act of 1981, Public Law 97-34, 95
Stat. 172 (August 13, 1981) (enacting
section 168 of the 1954 Code, which pro-
vided the accelerated cost recovery sys-
tem); section 201(a) of the Tax Reform
Act of 1986 (amending section 168 of the
Code, as redesignated by section 2(a) of
the Tax Reform Act of 1986, to replace
generally the accelerated cost recovery
system with the modified accelerated cost
recovery system).
As a result of the obsolescence of
§1.1502-12(g) due to the above-described
enacted legislation, the proposed reg-
ulations would remove that provision.
Relatedly, the proposed regulations would
revise §§1.57-1(b)(4)(ii) and 1.167(c)-1(a)
(5) to remove cross-references to §1.1502-
12(g). The proposed regulations also
would remove the second sentence of
§1.1502-17(a), which refers the reader to
§1.1502-12(g) for the treatment of depre-
ciable property after a transfer within the
group.
7. Section 1.1502-24 (consolidated
charitable contributions deduction)
As noted in part II.A.5 of this
Explanation of Provisions, §1.1502-24(a)
sets forth a rule to determine the amount
of the consolidated charitable contri-
butions deduction for a group. Section
1.1502-24(a)(2) includes a reference to
“five percent” of the adjusted consolidated
taxable income of a group, which is based
on section 170(b)(2) of the 1954 Code, as
that section existed prior to enactment of
the Economic Recovery Tax Act of 1981.
Section 263(a) of the Economic Recovery
Tax Act of 1981 amended section 170(b)
(2) of the 1954 Code to increase the
deduction limitation for corporations from
5 percent of the taxpayer’s total income
for a taxable year to 10 percent of that
income.
The proposed regulations would revise
§1.1502-24(a)(2) to replace the reference
to “five percent” with a reference to the
“percentage limitation on the total char-
itable contribution deduction provided
in section 170(b)(2)(A).” The Treasury
Department and the IRS have proposed
this revision, as opposed to a reference
to “10 percent” (as currently set forth in
section 170(b)(2)(A) of the Code), to
reduce the need to provide future statutory
updates to §1.1502-24. See paragraph
9 of the Proposed Amendments to the
Regulations, set forth in the NPRM (REG-
101652-10) published in the Federal
Register (80 FR 33211) on June 11, 2015.
8. Section 1.1502-26 (consolidated
dividends received deduction)
Section 1.1502-26 provides rules for
determining the consolidated DRD for the
taxable year of a group. On several occa-
sions since the publication of the original
version of §1.1502-26 in 1966, Congress
has enacted legislation that amended the
corporate DRD sections of the 1954 Code
and the Code – most recently by section
13002 of the TCJA. To update §1.1502-
26 to reflect the corporate DRD provisions
of the Code, the proposed regulations
would revise §1.1502-26(a) to replace the
reference to the 85-percent DRD (reflect-
ing the rate set forth in section 246(b)(1)
of the 1954 Code, prior to the enactment
of section 611(a)(3) of the Tax Reform Act
of 1986) with a reference to the limitation
on the aggregate amount of dividends-re-
ceived deductions described in section
246(b) of the Code.
In addition, the proposed regulations
would strike the reference to section
244 of the Code in §1.1502-26(a), and
the reference to section 247 of the Code
in §1.1502-26(b), both of which were
repealed by section 221(a)(41)(A) of
Division A of the Tax Increase Prevention
Act of 2014. The proposed regula-
tions also would revise the examples in
§1.1502-26(c) to reflect the updates made
to §1.1502-26.
9. Section 1.1502-34 (special aggregate
stock ownership rules)
Section 1.1502-34 provides that, for
purposes of §§1.1502-1 through 1.1502-
80, in determining the stock ownership
of a member of a group in another cor-
poration (issuing corporation) for pur-
poses of determining the application of
now-repealed section 333(b) of the 1954
Code, section 165(g)(3)(A) of the Code,
section 332(b)(1) of the Code, section
351(a) of the Code, section 732(f) of the
Code, or section 904(f) of the Code, in a
consolidated return year, there is included
stock owned by all other members of the
group in the issuing corporation. Section
1.1502-34 also provides that the special
rule for minority shareholders in now-re-
pealed section 337(d) of the 1954 Code
does not apply with respect to amounts
received by applicable member sharehold-
ers in a liquidation of the issuing member.
Numerous statutory amendments have
impacted the provisions described in
§1.1502-34. First, section 333 of the 1954
Code was repealed by section 631(e)(3) of

August 21, 2023 576 Bulletin No. 2023–34
the Tax Reform Act of 1986. In addition,
section 631(a) of the Tax Reform Act of
1986 struck section 337 of the 1954 Code
and replaced that provision with section
337 of the Code, which sets forth a sub-
section (d) that provides the Secretary
with authority to prescribe regulations that
are necessary or appropriate to carry out
the purposes of General Utilities repeal.
Lastly, section 337(c) of the Code was
amended by section 10223(a) of title X
of the Omnibus Budget Reconciliation
Act of 1987 to clarify that, for purposes
of section 337 of the Code, “the deter-
mination of whether any corporation is
an 80-percent distributee shall be made
without regard to any consolidated return
regulation.”
The proposed regulations would revise
§1.1502-34 to reflect those statutory
amendments. Specifically, the proposed
regulations would revise §1.1502-34 to
remove references to sections 333 and
337(d) of the 1954 Code. To reduce the
need for future updates, the proposed reg-
ulations also would replace the reference
to “§§1.1502-1 through 1.1502-80” with a
reference to “the consolidated return reg-
ulations,” as defined in proposed §1.1502-
1(g). See part II.D.1 of this Explanation
of Provisions.
10. Section 1.1502-79(d) (carryover and
carryback of consolidated unused foreign
tax)
Section 1.1502-79(d) provides rules
addressing the apportionment of carryover
and carryback of consolidated unused
foreign tax to separate return years.
The proposed regulations would update
§1.1502-79 to reflect changes to the for-
eign tax credit rules enacted since the
regulation was issued as part of the 1966
final consolidated return regulations (TD
6894), published in the Federal Register
(31 FR 11794) on September 8, 1966.
Specifically, the proposed regulations
would revise §1.1502-79(d) to remove
references to the per-country foreign tax
credit limitation that was repealed by sec-
tion 1031(a) of the Tax Reform Act of
1976, update citations from section 904(d)
to section 904(c) to reflect amendments to
the 1954 Code made by section 1031(a) of
the Tax Reform Act of 1976, and update
a cross-reference from §1.1502-4(e) to
§1.1502-4(d) to reflect the revision of
§1.1502-4 made by final regulations (TD
9922) published in the Federal Register
(85 FR 71998) on November 12, 2020.
11. Section 1.1552-1 (earnings and profits
of members of consolidated groups)
Section 1.1552-1 requires generally
that, for purposes of determining the
earnings and profits of each member of
an affiliated group that is required to be
included in a consolidated return for the
group filed for a taxable year beginning
after December 31, 1953, and ending after
August 16, 1954, the tax liability of the
group is allocated among the members
of the group in accordance with certain
elected methods under §1.1552-1(c). See
§1.1552-1(a). Currently, §1.1552-1(a)(2)
(ii)(i) contains references to a corporate
surtax exemption.
However, section 301(a) of the
Revenue Act of 1978, Public Law 95-600,
92 Stat. 2763 (November 6, 1978), struck
section 11 of the 1954 Code and replaced
that section with a new section 11 of the
1954 Code, which set forth a corporate
income tax rather than a corporate surtax.
Accordingly, the proposed regulations
would revise §1.1552-1(a)(2)(ii)(i) to
remove the reference to the repealed cor-
porate surtax.
12. Section 1.1563-1 (controlled group of
corporations and component members)
Section 1563(a) and 1.1563-1 define
the term “controlled group of corpo-
rations” for purposes of sections 1561
through 1563 of the Code as including
a “parent-subsidiary controlled group.”
Section 1563(a)(1) defines a parent-sub-
sidiary controlled group. In this regard,
section 1563(d)(1) provides rules for
determining stock ownership for purposes
of determining whether a corporation is a
member of a parent-subsidiary controlled
group of corporations within the meaning
of section 1563(a)(1). Section 1.1563-
1(a)(2) incorporates these rules in defining
a parent-subsidiary controlled group.
Prior to amendment by the Technical
and Miscellaneous Revenue Act of 1988,
Public Law 100-647, 102 Stat. 3342
(November 10, 1988), section 1563(d)
(1) of the Code provided that for purposes
of determining whether a corporation is a
member of a parent-subsidiary controlled
group of corporations, stock owned by
a corporation means (A) stock owned
directly by such corporation, and (B) stock
owned with the application of section
1563(e)(1), which provides construc-
tive ownership rules related to options to
acquire stock. Similarly, §1.1563-1(a)(2)
(i)(A) and (B) provide that ownership of
stock for purposes of determining a par-
ent-subsidiary controlled group takes into
account stock owned “(directly and with
the application of §1.1563-3(b)(1), relat-
ing to options).”
Section 1018(s)(3)(A) of the
Technical and Miscellaneous Revenue
Act of 1988 amended section 1563(d)
(1)(B) to expand the application of the
constructive ownership rules of section
1563(e) for purposes of section 1563(d)
(1) to include the constructive owner-
ship rules of section 1563(e)(2) relat-
ing to attribution from partnerships and
section 1563(e)(3) relating to attribu-
tion from estates or trusts. Accordingly,
the proposed regulations would revise
§1.1563-1(a)(2)(i)(A) and (B) to include
references to the constructive stock
ownership rules in §1.1563-3(b)(2) that
attribute ownership of stock directly or
indirectly owned by or for a partnership
and the constructive stock ownership
rules in §1.1563-3(b)(3) that attribute
ownership of stock directly or indirectly
owned by or for an estate or trust, to
conform with the statutory amendment
to section 1563(d)(1)(B).
C. Removal of non-applicable
consolidated return regulations; revisions
to remove obsolete or outdated references
or terms
The proposed regulations would
remove numerous Treasury regulations
that are obsolete because they no longer
are applicable under their stated effective
or applicability dates. In addition, the pro-
posed regulations would revise numerous
Treasury regulations that contain refer-
ences or terms that have no practical appli-
cability to taxpayers because they are, for
example, obsoleted or otherwise outdated.
Further, the proposed regulations would
replace all gender-specific pronouns and
other identifiers in the consolidated return

Bulletin No. 2023–34 577 August 21, 2023
regulations with gender-neutral pronouns
and identifiers.
1. The “Cap A” consolidated return
regulations
Certain consolidated return regula-
tions are designated with an “A” in the
citation (for example, §1.1502-9A).
These regulations (Cap A regulations)
generally are applicable only to taxable
years ending in 1999 or earlier. The Cap
A regulations provide rules regarding
overall foreign loss recapture (§1.1502-
9A), built-in deductions (§1.1502-
15A), consolidated net operating losses
(§1.1502-21A), consolidated capital gain
or loss (§§1.1502-22A and 1.1502-41A),
consolidated net “section 1231” gain or
loss (§1.1502-23A), the agent for the
group (§1.1502-77A), separate return
years (§1.1502-79A), and the application
of section 382 of the Code (§§1.1502-
90A through 1.1502-99A).
The Cap A regulations have been
superseded, in their entirety, by §§1.1502-
9, 1.1502-15, 1.1502-21 through 1.1502-
23, 1.1502-77, 1.1502-79, and 1.1502-90
through 1.1502-99. Therefore, with one
exception, the proposed regulations would
remove the Cap A regulations.
The proposed regulations would not
remove §1.1502-77A because that sec-
tion has continuing applicability with
regard to IRS examination and audit
functions. Specifically, the IRS exam-
ination function has ongoing audits in
which the years at issue are subject to the
agent for the group rules in §1.1502-77A.
Because those rules address threshold
issues including which entity may act on
behalf of the group, and thus the validity
of any filing by the group, §1.1502-77A
continues to have practical applicability
for taxpayers.
The proposed regulations also would
make conforming revisions to the consoli-
dated return regulations due to the near-to-
tal removal of the Cap A regulations. For
example, the proposed regulations would
revise §§1.1502-11, 1.1502-43, and
1.1502-44 to remove all cross-references
to the Cap A regulations. The proposed
regulations also would revise §1.382-8
(relating to controlled groups) to remove
§1.382-8(i), which provides references to
the Cap A regulations.
2. Section 1.1502-13 (intercompany
transactions)
The proposed regulations would revise
§1.1502-13 to remove outdated transi-
tion rules and references. Specifically,
the proposed regulations would (i) revise
§1.1502-13(a)(3)(i) to remove a transi-
tion rule for consolidated return years
beginning on or after November 7, 2001;
(ii) revise §1.1502-13(f)(5)(ii)(B)(2) to
remove cross-references to obsolete tem-
porary regulations that affected certain
liquidations where the original Federal
income tax return for the year of liqui-
dation was filed on or before November
3, 2009; and (iii) revise §1.1502-13(f)(6)
(v) to remove references to transactions
occurring before July 12, 1995.
3. Section 1.1502-17 (methods of
accounting)
Section 1.1502-17 provides generally
that the method of accounting to be used
by each member of the group must be
determined in accordance with the pro-
visions of section 446 of the Code as if
such member filed a separate return. See
§1.1502-17(a). Section 1.1502-17(e)
refers taxpayers to §1.1502-17 (as con-
tained in the 26 CFR part 1 edition revised
as of April 1, 1995) for changes in method
of accounting effective for years begin-
ning before July 12, 1995. The proposed
regulations would revise §1.1502-17(e)
to strike that language because it has no
practical applicability to taxpayers.
4. Section 1.1502-18 (inventory
adjustment)
Section 1.1502-18 provides that, if
a member of a group filing a consoli-
dated return for the taxable year (i) was
a member of the group for its immedi-
ately preceding taxable year, and (ii) filed
a separate return for that preceding year,
then the intercompany profit amount of
that corporation for that separate return
year (that is, the initial inventory amount)
is added to the income of that corpora-
tion for the consolidated return year or
years in which the goods to which the
initial inventory amount is attributable
are disposed of outside the group or that
corporation becomes a non-member. See
§1.1502-18(b). Section 1.1502-18(a)
provides that, for purposes of §1.1502-
18 and subject to certain exceptions, the
term “intercompany profit amount” for
a taxable year means an amount equal
to the profits of a corporation arising in
transactions with other members of the
group with respect to goods that are, at the
close of such corporation’s taxable year,
included in the inventories of any member
of the group. See §1.1502-18(a).
However, paragraphs (a) through (f) of
§1.1502-18 do not apply for taxable years
beginning on or after July 12, 1995. See
§1.1502-18(g). Therefore, the special
rules set forth in §1.1502-18 have no prac-
tical applicability to taxpayers.
As a result, the proposed regulations
would remove §1.1502-18 and make con-
forming revisions to other Treasury regu-
lations. With regard to such conforming
revisions, the proposed regulations would
remove §1.279-6(d)(4), which provides
that members of an affiliated group that
file a consolidated return must not apply
the provisions of §1.1502-18 dealing
with inventory adjustments in determin-
ing earnings and profits for purposes of
§1.279-6. The proposed regulations also
would remove §1.1502-12(e), which
requires that, in computing the separate
taxable income of a member, inventory
adjustments must be made as provided in
§1.1502-18.
5. Section 1.1502-21 (net operating
losses)
Section 1.1502-21(b)(3)(i) and (ii) pro-
vide rules for consolidated groups to make
irrevocable elections to relinquish certain
carryback periods with regard to consol-
idated net operating losses. Elections
under each of §1.1502-21(b)(3)(i) and (ii)
must be made through statements filed
pursuant to rules set forth in those pro-
visions. Each provision provides that, if
the consolidated return year in which the
loss arises begins before January 1, 2003,
the statement making the election must be
signed by the common parent. The pro-
posed regulations would revise §1.1502-
21(b)(3)(i) and (b)(3)(ii)(B) to remove
those special instructions regarding elec-
tions for pre-2003 taxable years because
those special rules no longer have practi-
cal applicability to taxpayers.

August 21, 2023 578 Bulletin No. 2023–34
The proposed regulations also would
remove §1.1502-21(d), which pro-
vides coordination rules for CRCOs that
occurred before January 1, 1997. See part
II.B.2 of this Explanation of Provisions
(describing the replacement of the CRCO
rules with the consolidated section 382
rules set forth in §§1.1502-90 through
1.1502-99).
6. Section 1.1502-22 (consolidated
capital gain and loss)
Section 1.1502-22 provides gener-
ally that determinations under section
1222 (including capital gain and loss)
with respect to members during consol-
idated return years are not made sepa-
rately; rather, consolidated amounts are
determined for the group as a whole. See
§1.1502-22(a). The proposed regulations
would remove §1.1502-22(d), which pro-
vides coordination rules for CRCOs that
occurred before January 1, 1997. See part
II.B.2 of this Explanation of Provisions.
7. Section 1.1502-24 (consolidated
charitable contributions deduction)
The proposed regulations would revise
§1.1502-24(c) to remove the reference
to §1.1502-25, which provided rules for
groups to compute a “consolidated sec-
tion 922 deduction.” See part II.A.2 of
this Explanation of Provisions (describ-
ing the repeal of section 922 of the 1954
Code by the Tax Reform Act of 1976).
Section 1.1502-25 was removed by final
regulations (TD 8474) published in the
Federal Register (58 FR 25556) on April
27, 1993, which removed final and tempo-
rary regulations relating primarily to pro-
visions of prior law in accordance with the
Regulatory Burden Reduction Initiative of
the Treasury Department and the IRS.
8. Section 1.1502-75 (filing of
consolidated returns)
Section 1.1502-75(h)(2) provides
that, if a group wishes to file a consol-
idated return for a taxable year, then a
Form 1122, Authorization and Consent of
Subsidiary Corporation To Be Included in
a Consolidated Income Tax Return, must
be executed by each subsidiary. Section
1.1502-75(h)(2) also provides that, (i) for
taxable years beginning after December
31, 2002, the group must attach either
executed Forms 1122 or unsigned copies
of the completed Forms 1122 to the con-
solidated return; but (ii) for taxable years
beginning before January 1, 2003, the
executed Forms 1122 must be attached
to the consolidated return for the taxable
year. This transition rule for taxable years
beginning before January 1, 2003, no lon-
ger has practical applicability to taxpay-
ers. Therefore, the proposed regulations
would revise §1.1502-75(h)(2) to provide
simply that the group must attach either
executed Forms 1122 or unsigned copies
of the completed Forms 1122 to the con-
solidated return.
9. Section 1.1502-76 (taxable year of
members of group)
Section 1.1502-76 sets forth rules for
the taxable year of members of a group.
The proposed regulations would revise
§1.1502-76(b)(1)(ii)(A)(2) and (b)(2)
(v) to remove references to transactions
occurring before November 10, 1999,
because those references have no practical
applicability to taxpayers.
10. Section 1.1502-80 (applicability of
other provisions of law)
Section 1.1502-80 provides generally
that (i) the Code, or other law, is applica-
ble to the group to the extent the consol-
idated return regulations do not exclude
its application; and (ii) to the extent not
excluded, other rules operate in addition
to, and may be modified by, the regu-
lations. See §1.1502-80(a)(1). Section
1.1502-80(c)(2) provides a cross-refer-
ence to §1.1502-36 for additional rules
relating to worthlessness of subsidiary
stock on or after September 17, 2008. The
proposed regulations would remove the
reference to that date because it no longer
has practical applicability to taxpayers.
Section 1.1502-80 also sets forth a spe-
cial rule that provides that section 357(c)
of the Code does not apply to any transac-
tion to which §1.1502-13 and other spec-
ified sections of the consolidated return
regulations apply. See §1.1502-80(d).
A concern arose in response to this rule
that, because §1.1502-80(d) provides that
section 357(c) of the Code does not apply to
certain intragroup section 351 exchanges,
no liabilities can technically be excluded
under section 357(c)(3). See preamble
to proposed regulations (REG-137519-
01) published in the Federal Register
(66 FR 57021, 57022) on November 14,
2001 (proposed consolidated section
357(c) regulations). Therefore, in such
an intragroup section 351 exchange,
the transferor’s basis in the stock of the
transferee received in the transfer first
would be reduced by liabilities assumed
by the transferee, including those liabili-
ties described in section 357(c)(3) of the
Code that would not have reduced basis
had section 357(c) applied. See id. Then,
the transferor’s basis in the stock of the
transferee would be reduced a second time
under the principles of §1.1502-32 at the
time the liability does in fact give rise to a
deduction on the part of the transferee and
is taken into account on the consolidated
return. See id. This result ultimately
could cause the transferor to recognize an
amount of gain on the sale of the stock of
the transferee that does not clearly reflect
income. See id.
The Treasury Department and the
IRS published the proposed consolidated
section 357(c) regulations to eliminate
potential duplicative stock basis reduc-
tions arising from such transactions.
Specifically, those proposed regulations
were published to clarify that, in certain
transfers described in section 351 of the
Code between members of a consolidated
group, a transferee’s assumption of liabil-
ities described in section 357(c)(3)(A) of
the Code, other than those also described
in section 357(c)(3)(B) of the Code,
will not reduce the transferor’s basis in
the transferee’s stock received in the
exchange. See Explanation of Provisions
to the proposed consolidated section
357(c) regulations, 66 FR 57021.
However, upon reflection, the proposed
rule is unnecessary because §§1.1502-32
and 1.1502-80 prevent any duplicative
stock basis reduction. See §1.1502-32(a)
(2) (providing that a member’s basis in its
subsidiary’s stock “must not be adjusted
under this section and other rules of law
in a manner that has the effect of dupli-
cating an adjustment.”); §1.1502-80(a)
(2) (“Nothing in these regulations shall be
interpreted or applied to require an adjust-
ment, inclusion, or other item to the extent

Bulletin No. 2023–34 579 August 21, 2023
it would have the effect of duplicating any
other adjustment, inclusion, or other item
required under the Code or other rule of
law, including other provisions of these
regulations.”). Accordingly, this document
withdraws those proposed regulations.
11. Section 1.1502-81T (Alaska Native
Corporations)
In 1984, Congress enacted legisla-
tion to revise the affiliation requirements
under section 1504(a) of the 1954 Code to
incorporate an 80-percent equity owner-
ship test. See section 60(a) of the Deficit
Reduction Act of 1984. However, the
applicability of these statutory amend-
ments was delayed until 1992 with respect
to the affiliation of a corporation with an
Alaska Native Corporation (ANC) estab-
lished under the Alaska Native Claims
Settlement Act, Public Law 92-203, 85
Stat. 688 (December 18, 1971). See sec-
tion 60(b)(5) of the Deficit Reduction Act
of 1984. Moreover, section 1804(e)(4) of
the Tax Reform Act of 1986 struck section
60(b)(5) of the Deficit Reduction Act of
1984 and replaced that provision with a
provision that, for any taxable year begin-
ning after 1984 and before 1992, relaxed
the requirements for affiliation with an
ANC or with a wholly owned ANC sub-
sidiary. Accordingly, until 1992, the pre-
1984 affiliation requirements contained
in section 1504(a) of the 1954 Code gov-
erned affiliation with an ANC or with a
wholly owned ANC subsidiary, without
regard to escrow arrangements, redemp-
tion rights, or similar provisions.
The Treasury Department and the IRS
published temporary regulations to imple-
ment those statutory provisions (ANC
temporary regulations). See TD 8130,
published in the Federal Register (52 FR
8447) on March 18, 1987. Specifically,
§1.1502-81T makes clear that the statu-
tory ANC affiliation rules resulted in no
tax saving, tax benefit, or tax loss to any
person, other than the use of the losses and
credits of an ANC and its wholly owned
subsidiaries. See preamble to the ANC
temporary regulations (52 FR 8447).
In particular, the ANC temporary regu-
lations provided that, except as approved
by the Secretary, no positive adjustment
under §1.1502-32(b)(1) would be made
with respect to the basis of stock of a
corporation that is affiliated with an ANC
through application of the ANC affiliation
rules. Id. In general, such approval by the
Secretary took into account the economic
effect of the investment by the ANC in the
corporation with which it is so affiliated.
Id. The proposed regulations propose to
withdraw §1.1502-81T because those spe-
cial affiliation rules no longer have practi-
cal applicability to taxpayers.
12. Section 1.1502-99 (effective/
applicability dates regarding consolidated
return regulations addressing sections
382 and 383 of the Code)
The application of sections 382 and
383 of the Code in a consolidated return
is addressed in §§1.1502-90 through
1.1502-99. In particular, §1.1502-99 pro-
vides effective and applicability dates and
transition rules for §§1.1502-90 through
1.1502-99. The proposed regulations
would revise §1.1502-99 to remove tran-
sition rules for testing periods that include
June 25, 1999. Those transition rules
have no practical applicability to taxpay-
ers because taxable years subject to those
transition rules generally are closed.
13. Section 1.1552-1 (earnings and
profits)
Section 1.1552-1(a)(1)(ii) provides
that the taxable income of a member is the
separate taxable income determined under
§1.1502-12, adjusted for certain items
taken into account in the computation of
consolidated taxable income. One item,
set forth in §1.1552-1(a)(1)(ii)(B), is the
“member’s capital gain net income (net
capital gain for taxable years beginning
before January 1, 1977) (determined with-
out regard to any net capital loss carryover
attributable to such member).” The pro-
posed regulations would revise §1.1552-
1(a)(1)(ii)(B) to remove the reference to
net capital gain for taxable years begin-
ning before January 1, 1977, because the
reference to that date has no practical
applicability to taxpayers.
14. Sections 1.1503-2 (dual consolidated
loss) and 1.1503(d)-8 (effective dates)
Section 1.1503-2 provides rules to
address dual consolidated losses incurred in
taxable years beginning on or after October
1, 1992, and before April 18, 2007 (or
January 1, 2007, in limited instances). See
§1.1503-2(h) (providing October 1, 1992,
applicability date) §1.1503(d)-8 (providing
April 18, 2007, and January 1, 2007, appli-
cability dates). Dual consolidated losses
incurred on or after April 18, 2007, or
January 1, 2007, are subject to the rules set
forth in §§1.1503(d)-1 through 1.1503(d)-
7. See §1.1503(d)-8. Therefore, the pro-
posed regulations would remove §1.1503-2
because that section has no practical appli-
cability to taxpayers. For the same reason,
the proposed regulations also would make
conforming changes to the effective date
provisions set forth in §1.1503(d)-8 to
reflect the removal of §1.1503-2.
15. Removal of obsolete or gendered
terminology
The proposed regulations would make
nonsubstantive changes to the consoli-
dated return regulations to removed obso-
lete or gendered terminology the proposed
regulations would replace all gender-spe-
cific pronouns and other identifiers in the
consolidated return regulations with gen-
der-neutral pronouns and identifiers. See
part I of this Explanation of Provisions.
The proposed regulations would replace
the term “possession” with the defined
term “U.S. territory” in §§1.1502-4(d)
(1) and 1.1503(d)-1(b)(7). See proposed
§1.1502-1(l). The proposed regulations
also would replace all gender-specific
pronouns and other identifiers in the con-
solidated return regulations and the regula-
tions under section 1563 of the Code with
gender-neutral pronouns and identifiers.
D. Changes to Improve Clarity
The proposed regulations would make
various revisions to the consolidated
return regulations that are intended to
increase their clarity and usability. These
proposed revisions are limited to creating
defined terms, updating cross-references,
correcting numbering, and other minor,
non-substantive edits.
1. Section 1.1502-1 (definitions)
Currently, the regulations under sec-
tion 1502 of the Code reference the term

August 21, 2023 580 Bulletin No. 2023–34
“consolidated return regulations” in sev-
eral provisions, although that term is not
defined in those regulations. In addition,
certain provisions in the regulations pub-
lished under section 1502 of the Code
refer to multiple sections of the regula-
tions. At the time of publication, those
provisions were intended to refer to all
regulations under section 1502. However,
due to the publication of additional reg-
ulations under section 1502 of the Code,
those references are no longer accurate.
To avoid taxpayer confusion, the pro-
posed regulations would add a defined
term “consolidated return regulations”
to §1.1502-1 that would not need to be
updated to account for future additions to
the regulations under section 1502 of the
Code. See proposed §1.1502-1(g).
2. Section 1.1502-13(f)(7) (examples
regarding intercompany transactions with
respect to stock of members)
As part of final regulations (TD 9475)
addressing corporate reorganizations and
distributions under sections 368(a)(1)(D)
and 354(b)(1)(B) of the Code, published
in the Federal Register (74 FR 67053)
on December 18, 2009, the Treasury
Department and the IRS inserted a new
Example 4 into the intercompany transac-
tion examples set forth in §1.1502-13(f)
(7). However, those final regulations
did not update internal cross-references
to certain existing examples in §1.1502-
13(f)(7), which were redesignated as a
result of new Example 4. Accordingly,
the proposed regulations would revise
§1.1502-13(f)(7) to update those internal
cross-references. More generally, the pro-
posed regulations would add paragraph
designations to undesignated examples
throughout §1.1502-13.
3. Section 1.1502-32(b)(4) and (5)
(waiver of loss carryovers from separate
return limitation years and examples)
The proposed regulations would revise
§1.1502-32(b)(4) to remove paragraphs
that cross-reference provisions of the loss
disallowance regulations under §1.1502-
20 that were removed by final regula-
tions (TD 9424) published in the Federal
Register (73 FR 53934) on September
17, 2008 (final unified loss regulations).
Section 1.1502-20 provided loss-disal-
lowance rules with regard to the dispo-
sition or deconsolidation of subsidiary
stock. As provided in the preamble to the
final unified loss regulations, the Treasury
Department and the IRS do not expect that
§1.1502-20 would affect any transactions
occurring on or after September 17, 2008
(the applicability date of those final regu-
lations). See 73 FR 53944. The proposed
regulations would replace the removed
paragraphs with cross-references to pro-
visions set forth in §1.1502-32(b)(4), as
contained in 26 CFR part 1, revised as of
April 1, 2005.
Additionally, the proposed regulations
would correct an error in Example 6 of
§1.1502-32(b)(5)(ii), which (1) addressed
an intercompany reorganization described
in section 368(a)(1)(A) of the Code (and in
section 368(a)(1)(D) of the Code), and (2)
treats a receipt of $10 of boot as a dividend
under section 356(a)(2) of the Code. This
treatment of intercompany boot conflicts
with §1.1502-13(f)(3)(ii), which expressly
provides that nonqualifying property (that
is, money or other property) received as
part of such intercompany reorganization
(that is, a transaction to which section 354
of the Code would apply but for the fact
that nonqualifying property is received) is
treated as received by the member share-
holder in a separate transaction occurring
immediately after the transaction.
4. Section 1.1502-47 (consolidated
returns by life-nonlife groups)
The proposed regulations would revise
§1.1502-47(b), (h), and (j) to correct cer-
tain typographical errors and update cer-
tain cross-references.
5. Section 1.1502-75 (filing of
consolidated returns)
The proposed regulations would revise
§1.1502-75(c)(1) to set forth the cur-
rent procedures for a group to request to
discontinue filing consolidated returns.
The proposed regulations would remove
§1.1502-75(d)(5), which applies to con-
solidated return years in which an exist-
ing consolidated group obtains a new
common parent solely by reason of the
enactment of section 833 of the Code
as part of the Tax Reform Act of 1986.
This provision no longer has practical
applicability to taxpayers. In addition,
the proposed regulations would update
§1.1502-75(h)(1) to reflect final regula-
tions (TD 9715) that revise rules regard-
ing agency for consolidated groups under
§1.1502-77, which were published in the
Federal Register (80 FR 17314) on April
1, 2015. The proposed regulations also
would update §1.1502-75(h)(1) to reflect
the elimination of the district director
positions by the Commissioner pursuant
to section 1001 of the Internal Revenue
Service Restructuring and Reform Act of
1998, Public Law 105-206, 112 Stat. 685
(July 22, 1998).
6. Section 1.1502-76 (taxable year of
members of group)
The proposed regulations would revise
§1.1502-76(a) to set forth the current
procedures for taxpayers requesting con-
sent of the Commissioner if at least one
member of the group is on a 52-53-week
taxable year and all members of the group
have taxable years ending within the same
7-day period. The proposed regulations
also would revise several examples in
§§1.1502-76(c)(3) and 1.1502-77(g) to
reflect changes to the due date for Federal
corporate income tax returns set forth
in section 6072(a) of the Code, as made
by section 2006(a)(2) of the Surface
Transportation and Veterans Health Care
Choice Improvement Act of 2015, Public
Law 114-41, 129 Stat. 443 (July 31, 2015).
7. Section 1.1502-79 (separate return
years)
Section 1.1502-79(e)(2) provides a
rule to determine the portion of the con-
solidated excess charitable contributions
attributable to a member of a consoli-
dated group. The proposed regulations
would make non-substantive changes to
enhance the clarity of that provision. In
particular, the proposed regulations would
separate the current one-sentence rule
into three sentences, the first of which
provides that the portion of the consoli-
dated excess charitable contributions for
any year attributable to a member is an
amount equal to the consolidated excess
contributions multiplied by a fraction.
The second and third sentences set forth

Bulletin No. 2023–34 581 August 21, 2023
the numerator and denominator of that
fraction, respectively.
8. Section 1.1502-100 (corporations
exempt from tax)
Section 1.1502-100 provides rules to
compute the tax liability for a consoli-
dated return year of a group of exempt
corporations that files or is required to
file a consolidated return for the taxable
year. The proposed regulations would
revise §1.1502-100(a)(2) to replace the
reference to “§§1.1502-1 through 1.1502-
80” with a reference to “the consolidated
return regulations” (see the discussion in
parts II.B.9 and II.D.1 of this Explanation
of Provisions.) The proposed regula-
tions also would revise §1.1502-100(d) to
reflect the changes proposed by this docu-
ment to §1.1502-12.
9. Removal of cross-references to prior-
law versions of the CFR
In general, the proposed regulations
would revise numerous provisions in the
consolidated return regulations to remove
cross-references to prior-law versions of
the CFR. However, the proposed regu-
lations would retain cross-references in
the consolidated return regulations to pri-
or-law CFRs with continuing relevance.
In particular, the proposed regulations
would retain cross-references relating to
intercompany transactions and certain
separate return limitation year issues.
E. Provisions Affected by Legislation
That the Proposed Regulations Do Not
Change
The proposed regulations would not
modify certain provisions in the con-
solidated return regulations that have
been affected by subsequent legislation.
Principally, aside from the nonsubstan-
tive change discussed in part II.B.3 of this
Explanation of Provisions, the proposed
regulations would not revise §1.1502-3
(relating to consolidated credits). Section
1.1502-3 provides rules for the former
investment tax credit that existed prior to
its replacement by the general business
credit in section 211 of the Tax Reform Act
of 1986. The proposed regulations also
would not revise §1.1502-79(c), which
provides rules for the carryover and carry-
back of unused investment credits to sep-
arate return years. Because of extensive
changes to the relevant statutory provi-
sions, substantive revisions of §§1.1502-3
and 1.1502-79(c) are beyond the scope
of these proposed regulations. However,
the Treasury Department and the IRS
are considering updating §§1.1502-3 and
1.1502-79(c) to reflect current law, and the
Treasury Department and the IRS request
comments on potential revisions to these
regulatory provisions.
F. Withdrawal of proposed regulations;
proposed withdrawal of temporary
regulations
1. Notices of Proposed Rulemaking
Incorporated into the Proposed
Regulations or into Final Regulations
This document withdraws the portions
of two NPRMs that, in revised form, (i)
have been incorporated into final regula-
tions, or (ii) are incorporated into these
proposed regulations in revised form.
a. Consolidated former alternative
minimum tax proposed regulations
As discussed in part II.B.4 of this
Explanation of Provisions, the Treasury
Department and the IRS published the
consolidated Former AMT proposed reg-
ulations on December 30, 1992, regarding
the computation of the Former AMT by
consolidated groups and the allocation of
related items. This document withdraws
proposed amendments to §1.1502-2,
regarding the computation of a consoli-
dated group’s tax liability, set forth in the
consolidated Former AMT proposed regu-
lations. These proposed amendments were
incorporated, in revised form, into the base
erosion and anti-abuse tax final regula-
tions (TD 9885), published in the Federal
Register (84 FR 66968) on December 6,
2019 (BEAT final regulations). However,
the proposed amendments to §1.1502-2
set forth in the consolidated Former AMT
proposed regulations were not with-
drawn by the BEAT final regulations.
Accordingly, this document withdraws
the revisions to §1.1502-2 proposed by
the consolidated Former AMT proposed
regulations.
The consolidated Former AMT pro-
posed regulations also would provide
rules under §1.1552-1(h) governing
the allocation of the environmental tax
imposed by section 59A of the Code (as
in effect at the time) to members for pur-
poses of computing earnings and profits.
Section 59A of the Code was repealed by
section 221(a)(12)(A), Division A, of the
Tax Increase Prevention Act of 2014. As a
result, this document withdraws proposed
§1.1552-1(h), as contained in the consoli-
dated Former AMT proposed regulations.
b. Proposed regulations regarding
absorption of members’ losses and to
eliminate circular basis adjustments
The Treasury Department and the IRS
published a NPRM (REG-101652-10) in
the Federal Register (80 FR 33211) on
June 11, 2015 (circular basis proposed
regulations). The circular basis proposed
regulations would provide guidance
regarding the absorption of members’
losses in a consolidated return year, and
provide guidance to eliminate circular
adjustments to the basis of a group member.
These circular basis proposed regulations
would have (i) revised §§1.1502-11(a)
and 1.1502-24 to remove references to
repealed statutes or obsolete regulations,
and (ii) removed §§1.1502-21A, 1.1502-
22A, and 1.1502-23A. Because this doc-
ument would (i) make the same revisions
to §§1.1502-11(a) and 1.1502-24, and (ii)
remove §§1.1502-21A, 1.1502-22A, and
1.1502-23A, this document withdraws
the proposed revisions to §§1.1502-11(a),
1.1502-21A, 1.1502-22A, 1.1502-23A,
and 1.1502-24 set forth in the circular
basis proposed regulations.
2. NPRM that became obsolete as a result
of incorporation of subsequent NPRM
into final regulations
On March 18, 2004, the Treasury
Department and the IRS published in the
Federal Register (69 FR 12811) a NPRM
(REG-153172-03) under §1.1502-80(c)
(proposed loss limitation rules). The
proposed loss limitation rules set forth
guidance regarding (i) the deductibility of
losses recognized on dispositions of sub-
sidiary stock by members of a consolidated
group, (ii) the consequences of treating

August 21, 2023 582 Bulletin No. 2023–34
subsidiary stock as worthless, and (iii)
when stock of a member of a consolidated
group may be treated as worthless. The
proposed loss limitation rules cross-ref-
erenced temporary regulations (TD 9118)
published in the Federal Register (69 FR
12799) on the same day, the text of which
served as the text for those proposals.
On July 18, 2007, the Treasury
Department and the IRS published in the
Federal Register (72 FR 39313) final regu-
lations (TD 9341), which finalized a version
of §1.1502-80(c) that had been proposed
by an NPRM (REG-157711-02) published
in the Federal Register (72 FR 2964) on
January 23, 2007. Those final regulations
removed §1.1502-80T(c) but did not with-
draw the proposed loss limitation rules.
Accordingly, this document withdraws the
proposed loss limitation rules.
3. NPRMs that cross-reference temporary
regulations that have been removed,
have expired, or otherwise have become
obsolete
a. NPRMs under §1.1502-20
The Treasury Department and the IRS
published four NPRMs under §1.1502-20,
which cross-referenced temporary regula-
tions under §1.1502-20T published in the
Federal Register on the same day, the text
of which served as the text for those propos-
als. On September 17, 2008, the Treasury
Department and the IRS published final
regulations (TD 9424) in the Federal
Register (73 FR 53934) that included the
final unified loss rule under §1.1502-36.
As a result of these final regulations, the
Treasury Department and the IRS removed
§§1.1502-20 and 1.1502-20T. However,
the four NPRMs under §1.1502-20 were
not withdrawn by those final regulations.
Accordingly, this document withdraws
the four NPRMs under §1.1502-20, which
consist of the following:
(1) An NPRM (REG-102740-02) pub-
lished in the Federal Register (67
FR 11070) on March 12, 2002, which
cross-referenced the text of temporary
regulations (TD 8984) published in
the Federal Register (67 FR 11034)
on the same day (March 12 unified
loss proposed regulations).
(2) An NPRM (REG-102305-02) pub-
lished in the Federal Register (67
FR 38040) on May 31, 2002, which
clarified and revised aspects of the
March 12 unified loss proposed reg-
ulations and cross-referenced the text
of temporary regulations (TD 8998)
published in the Federal Register
(67 FR 37998) on the same day.
(3) An NPRM (REG-152524-02) pub-
lished in the Federal Register (68
FR 24404) on May 7, 2003, which
cross-referenced the text of tempo-
rary regulations (TD 9057) published
in the Federal Register (68 FR
24351) on the same day.
(4) An NPRM (REG-135898-04) pub-
lished in the Federal Register (69 FR
52462) on August 26, 2004, which
cross-referenced the text of tempo-
rary regulations (TD 9154) published
in the Federal Register (69 FR
52419) on the same day.
b. NPRMs under §1.1502-21
The Treasury Department and the IRS
published three NPRMs under §1.1502-
21, which cross-referenced temporary reg-
ulations under §1.1502-21T published in
the Federal Register on the same day, the
text of which served as the text for those
proposals. These NPRMs also contained
proposed regulations under §1.1502-32
(see part II.F.3.c of this Explanation of
Provisions).
Each of these temporary regulations
under §1.1502-21T has expired or has
been removed. However, the Treasury
Department and the IRS have not yet with-
drawn the three NPRMs under §1.1502-21.
Accordingly, this document withdraws
three NPRMs under §1.1502-21, which
consist of the following:
(1) An NPRM (REG-122564-02) pub-
lished in the Federal Register (67
FR 38039) on May 31, 2002, which
addressed elections for consolidated
groups to waive the carryback of cer-
tain losses arising in 2001 or 2002
and cross-referenced the text of tem-
porary regulations (TD 8997) pub-
lished in the Federal Register (67 FR
38000) on the same day.
(2) An NPRM (REG-131478-02) pub-
lished in the Federal Register (68
FR 12324) on March 14, 2003,
which addressed losses treated as
expired under §1.1502-35T(f)(1) on
and after March 7, 2002, and on or
before March 11, 2006 (including
corresponding basis adjustments),
and cross-referenced the text of tem-
porary regulations (TD 9048) pub-
lished in the Federal Register (68 FR
12287) on the same day.
(3) An NPRM (REG-151605-09) pub-
lished in the Federal Register (75
FR 35710) on June 23, 2010, which
addressed elections by consolidated
groups to elect to extend a net oper-
ating loss carryback period arising
in a single taxable year ending after
December 31, 2007, and beginning
before January 1, 2010, and cross-ref-
erenced the text of now-expired
temporary regulations (TD 9490)
published in the Federal Register
(75 FR 35643) on the same day.
c. NPRMs under §1.1502-32
The Treasury Department and the IRS
published five NPRMs under §1.1502-32
that cross-referenced temporary regula-
tions under §1.1502-32T published in the
Federal Register on the same day, the
text of which served as the text for those
proposals. Each of these temporary reg-
ulations under §1.1502-32T has expired
or have been removed. However, the
Treasury Department and the IRS have
not yet withdrawn the corresponding five
NPRMs under §1.1502-32.
Accordingly, this document withdraws
the five NPRMs under §1.1502-32, which
consist of the following:
(1) An NPRM (REG-129274-04) pub-
lished in the Federal Register (69 FR
51208) on August 18, 2004, which
addressed elections for consolidated
groups to waive the carryback of cer-
tain losses arising in 2001 or 2002
and cross-referenced the text of tem-
porary regulations (TD 9155) pub-
lished in the Federal Register (69 FR
51175) on the same day.
(2) An NPRM (REG-156420-06) pub-
lished in the Federal Register (72
FR 17814) on April 10, 2007 (pro-
posed anti-avoidance and anti-loss
reimportation regulations), which
proposed an anti-avoidance rule and
revised an anti-loss reimportation
rule, and cross-referenced the text
of temporary regulations (TD 9322)

Bulletin No. 2023–34 583 August 21, 2023
published in the Federal Register
(72 FR 17804) on the same day. The
proposed anti-avoidance and anti-
loss importation regulations also
contained proposed regulations under
§1.1502-35 (see part II.F.3.d of this
Explanation of Provisions).
(3) Each NPRM described in part II.F.3.b
of this Explanation of Provisions.
d. NPRM under §1.1502-35
The Treasury Department and the IRS
published two NPRMs under §1.1502-35,
which cross-referenced temporary regula-
tions under §1.1502-35T published in the
Federal Register on the same day, the
text of which served as the text for those
proposals. The temporary regulations
under §1.1502-35T have expired or have
been removed. However, the Treasury
Department and the IRS have not yet
withdrawn the corresponding two NPRMs
under §1.1502-35.
Accordingly, this document withdraws
the two NPRMs under §1.1502-35, which
consist of the following:
(1) An NPRM (REG 153172-03) published
in the Federal Register (69 FR 12811)
on March 18, 2004, which proposed
guidance regarding worthless subsidi-
ary stock, and cross-referenced the text
of temporary regulations (TD 9118)
published in the Federal Register (69
FR 12799) on the same day.
(2) The proposed anti-avoidance and
anti-loss reimportation regulations,
described in part II.F.3.c of this
Explanation of Provisions.
Proposed Applicability Date
Pursuant to section 1503(a) of the
Code, these proposed regulations would
apply to consolidated return years for
which the due date of the return (with-
out regard to extensions) is after the date
of publication of the Treasury decision
adopting these rules as final regulations in
the Federal Register.
Special Analyses
I. Regulatory Planning and Review
Executive Orders 13563 and 12866
direct agencies to assess costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select reg-
ulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
Pursuant to the Memorandum
of Agreement, Review of Treasury
Regulations under Executive Order 12866
(June 9, 2023), tax regulatory actions
issued by the IRS are not subject to the
requirements of section 6 of Executive
Order 12866, as amended. Therefore,
a regulatory impact assessment is not
required.
II. Paperwork Reduction Act
These regulations update the regu-
lations under section 1502 of the Code
(that is, the consolidated return regula-
tions) by revising and removing out-
dated and obsolete provisions, such
as cross-references to temporary reg-
ulations, regulations, and statutes that
have been repealed, removed, expired,
renumbered, or otherwise have become
obsolete. Therefore, the proposed reg-
ulations would not impose additional
reporting burden beyond what is other-
wise required by existing statutes, reg-
ulations, and forms. The total burden
associated with the proposed regula-
tions, if finalized in their current form,
would be $0.
III. Regulatory Flexibility Act
The proposed regulations would not
impose a collection of information on
small entities. Further, pursuant to the
Regulatory Flexibility Act (5 U.S.C.
chapter 6), it is hereby certified that the
proposed regulations would not have a
significant economic impact on a sub-
stantial number of small entities. This
certification is based on the fact that the
proposed regulations would apply only
to corporations that file consolidated
Federal income tax returns, and that such
corporations tend to be larger businesses.
Therefore, the proposed regulations
would not create additional obligations
for, or impose an economic impact on,
small entities.
Pursuant to section 7805(f) of the
Code, the proposed regulations have been
submitted to the Chief Counsel for the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in any
one year by a State, local, or tribal govern-
ment, in the aggregate, or by the private
sector, of $100 million in 1995 dollars,
updated annually for inflation. In 2022,
that threshold is approximately $190 mil-
lion. The proposed regulations do not
propose any rule that would include any
Federal mandate that may result in expen-
ditures by State, local, or tribal govern-
ments, or by the private sector in excess of
that threshold.
V. Executive Order 13132:

Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications
if the rule either imposes substantial,
direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive order. The proposed regula-
tions do not propose rules that would
have federalism implications, impose
substantial direct compliance costs on
State and local governments, or preempt
State law within the meaning of the
Executive order.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are sub-
mitted timely to the IRS as prescribed in
this preamble under the “ADDRESSES”
heading. The Treasury Department and

August 21, 2023 584 Bulletin No. 2023–34
the IRS request comments on all aspects of
the proposed regulations, including com-
ments on any consolidated return rules not
addressed in these proposed regulations
that require revision or removal as a result
of amendments to the Code or regulations
made after such rules were promulgated.
All commenters are strongly encouraged
to submit comments electronically. The
Treasury Department and the IRS will
publish for public availability any com-
ment submitted electronically or on paper
to its public docket on https://www.regu-
lations.gov.
A public hearing will be scheduled
if requested in writing by any person
who timely submits electronic or written
comments. Requests for a public hear-
ing are encouraged to be made electroni-
cally. If a public hearing is scheduled, a
notice of the date and time for the public
hearing will be published in the Federal
Register. Announcement 2023-16,
2023-20 IRB 854, provides that, follow-
ing the end of the national emergency
concerning the Coronavirus Disease
2019 (COVID-19) pandemic, the IRS no
longer will conduct public hearings on
notices of proposed rulemaking solely
by telephone for proposed regulations
published in the Federal Register after
May 11, 2023. A telephonic option will
remain available for those who prefer
to attend or testify at a public hearing
by telephone. Any telephonic hearing
will be made accessible to people with
disabilities.
Statement of Availability of IRS
Documents
Announcement 2023-16, 2023-20
IRB 854, is published in the Internal
Revenue Bulletin and is available from
the Superintendent of Documents,
U.S. Government Publishing Office,
Washington, DC 20402, or by visiting the
IRS website at https://www.irs.gov.
Drafting Information
The principal authors of this document
are Kelton P. Frye and William W. Burhop
of the Office of Associate Chief Counsel
(Corporate). Other personnel from the
Treasury Department and the IRS partic-
ipated in its development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
26 CFR Part 5
Income taxes, Reporting and record-
keeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
parts 1, 5, 301, and 602 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by removing the entries
for §§1.1503-2, 1.1502-9A, 1.1502-15A,
1.1502-21A, 1.1502-22A, 1.1502-23A,
1.1502-41A, 1.1502-79A, 1.1502-91A,
1.1502-92A, 1.1502-93A, 1.1502-94A,
1.1502-95A, 1.1502-96A, 1.1502-98A,
and 1.1502-99A to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
§1.57-1 [Amended]
Par. 2. Section 1.57-1 is amended by
removing the text “and § 1.1502-12(g)”
from paragraph (b)(4)(ii).
Par. 3. Section 1.167(c)-1 is amended
by revising paragraph (a)(5) to read as
follows:
§1.167(c)-1 Limitations on methods of
computing depreciation under section
167(b)(2), (3), and (4).
(a) * * *
(5) See §§1.1502-13 and 1.1502-68
for provisions dealing with depreciation
of property received by a member of an
affiliated group from another member of
the group during a consolidated return
period.
* * * * *
§1.279-6 [Amended]
Par. 4. Section 1.279-6 is amended by:
1. Removing the text “and” from the
end of paragraph (d)(1).
2. Adding the text “and” to the end of
paragraph (d)(2).
3. Removing the text “, and” from the
end of paragraph (d)(3) and adding the
text “.” in its place.
4. Removing paragraph (d)(4).
§1.382-8 [Amended]
Par. 5. Section 1.382-8 is amended by
removing and reserving paragraph (i).
Par. 6. Section 1.1502-0 is revised to
read as follows:
§1.1502-0 Effective/Applicability dates.
(a) In general. Except as provided in
paragraph (b) of this section, the consol-
idated return regulations (as defined in
§1.1502-1(g)) are applicable to taxable
years beginning after December 31, 1965.
(b) Exceptions. The applicability date
described in paragraph (a) of this section
does not apply to any provision of the con-
solidated return regulations with an appli-
cability or effective date different than
the date provided by paragraph (a) of this
section.
Par. 7. Section 1.1502-1 is amended by:
1. Adding introductory text.
2. Removing the text “,” from the end
of paragraph (f)(2)(iii) and adding the text
“.” in its place.
3. Removing the undesignated para-
graph after paragraph (f)(2)(iii).
4. Removing the text “and for which
section 1562 was not effective” from the
last sentence of paragraph (f)(3).
5. Revising paragraph (g).
6. Redesignating paragraph (l) as para-
graph (m).
7. Adding a new paragraph (l).
The revision and addition read as
follows:

Bulletin No. 2023–34 585 August 21, 2023
§1.1502-1 Definitions.
For purposes of the consolidated return
regulations:
* * * * *
(g) Consolidated return regulations.
The term consolidated return regulations
means the regulations under section 1502.
* * * * *
(l) U.S. territory. The term U.S. terri-
tory means—
(1) American Samoa;
(2) The Commonwealth of the Northern
Mariana Islands;
(3) The Commonwealth of Puerto
Rico;
(4) Guam; and
(5) The Virgin Islands of the United
States.
* * * * *
§ 1.1502-3 [Amended]
Par. 8. Section 1.1502-3 is amended by
removing and reserving paragraph (e).
§1.1502-4 [Amended]
Par. 9. Section 1.1502-4 is amended
by removing the text “possession” from
paragraph (d)(1) and adding the text “U.S.
territory” in its place.
Par. 10. Section 1.1502-5 is revised to
read as follows:
§1.1502-5 Estimated tax.
(a) General rule—(1) Consolidated
estimated tax. If a group files a consoli-
dated return for two consecutive taxable
years, it must make payments of estimated
tax on a consolidated basis for each sub-
sequent taxable year until separate returns
are filed. When filing on a consolidated
basis, the group is generally treated as a
single corporation for purposes of section
6655 (relating to payment of estimated tax
by corporations). If separate returns are
filed by the members for a taxable year,
the amount of any estimated tax payments
made with respect to a consolidated esti-
mated tax for the year is credited against
the separate tax liabilities of the members
in any reasonable manner designated by
the common parent.
(2) First two consolidated return years.
For its first two consolidated return years,
a group may make payments of estimated
tax on either a consolidated or a separate
member basis. The amount of any sepa-
rate estimated tax payments is credited
against the consolidated tax liability of the
group.
(b) Addition to tax for failure to pay
estimated tax under section 6655—(1)
Consolidated return filed. For its first two
consolidated return years, a group may
compute the amount of the penalty (if any)
under section 6655 on a consolidated basis
or a separate member basis, regardless of
the method of payment. Thereafter, the
group must compute the penalty for any
consolidated return year on a consolidated
basis.
(2) Computation of penalty on con-
solidated basis. (i) This paragraph (b)
(2) provides rules for computing the pen-
alty under section 6655 on a consolidated
basis.
(ii) The tax shown on the return for
the preceding taxable year referred to in
section 6655(d)(1)(B)(ii) is, if a consoli-
dated return was filed for that preceding
year, the tax shown on the consolidated
return for that preceding year or, if a
consolidated return was not filed for that
preceding year, the aggregate of the taxes
shown on the separate returns of the com-
mon parent and any other corporation that
was a member of the same affiliated group
as the common parent for that preceding
year.
(iii) If estimated tax was not paid on
a consolidated basis, the amount of the
group’s payments of estimated tax for the
taxable year is the aggregate of the pay-
ments made by all members for the year.
(iv) If the common parent is otherwise
eligible to use the section 6655(d)(1)(B)
(ii) required annual payment rule, that rule
applies only if the group’s consolidated
return, or each member’s separate return
if the group did not file a consolidated
return, for the preceding taxable year was
a taxable year of 12 months.
(3) Computation of penalty on separate
member basis. To compute any penalty
under section 6655 on a separate member
basis, for purposes of section 6655(d)(1)
(B)(i), the “tax shown on the return” for
the taxable year is the portion of the tax
shown on the consolidated return alloca-
ble to the member under paragraph (b)
(6) of this section. If the member was
included in the consolidated return filed
by the group for the preceding taxable
year, for purposes of section 6655(d)(1)
(B)(ii), the “tax shown on the return” for
the preceding taxable year for any mem-
ber is the portion of the tax shown on the
consolidated return for the preceding year
allocable to the member under paragraph
(b)(6) of this section.
(4) Consolidated payments if separate
returns filed. If the group does not file a
consolidated return for the taxable year
but makes payments of estimated tax on a
consolidated basis, for purposes of section
6655(b)(1)(B), the “amount (if any) of the
installment paid” by any member is an
amount apportioned to the member in any
reasonable manner designated by the com-
mon parent. If a member was included in
the consolidated return filed by the group
for the preceding taxable year, the amount
of the member’s penalty under section
6655 is computed on the separate member
basis described in paragraph (b)(3) of this
section.
(5) Tax defined. For purposes of this
section, the term “tax” means the excess
of—
(i) The sum of—
(A) The consolidated tax imposed by
section 11 or subchapter L of chapter 1,
whichever applies;
(B) The tax imposed by section 55(a);
plus
(C) The tax imposed by section 59A;
over
(ii) The credits against tax provided by
part IV of subchapter A of chapter 1 of the
Internal Revenue Code.
(6) Allocation of consolidated tax lia-
bility for determining earnings and profits.
For purposes of this section, the tax shown
on a consolidated return is allocated to the
members of the group by allocating any
tax described in paragraph (b)(5)(i) of this
section, net of allowable credits under
paragraph (b)(5)(ii) of this section, under
the method that the group has elected pur-
suant to section 1552 and §1.1502-33(d).
(c) Examples. The provisions of this
section are illustrated by the following
examples.
(1) Example 1. Corporations P and S1 file a con-
solidated return for the first time for calendar year
2021. P and S1 also file consolidated returns for cal-
endar year 2022 and calendar year 2023. Under para-
graph (a)(2) of this section, for the 2021 and 2022
taxable years, P and S1 may pay estimated tax on

August 21, 2023 586 Bulletin No. 2023–34
either a separate or consolidated basis. Under para-
graph (a)(1) of this section, for the 2023 taxable year,
the group must pay its estimated tax on a consoli-
dated basis. In determining whether P and S1 come
within the exception provided in section 6655(d)(1)
(B)(ii) for 2023, the “tax shown on the return” is the
tax shown on the consolidated return for the 2022
taxable year.
(2) Example 2. Corporations P, S1, and S2 file
a consolidated return for the first time for calendar
year 2021 and file their second consolidated return
for calendar year 2022. S2 ceases to be a member of
the group on September 15, 2023. Under paragraph
(b)(2) of this section, in determining whether the
group (which no longer includes S2) comes within
the exception provided in section 6655(d)(1)(B)(ii)
for 2023, the “tax shown on the return” is the tax
shown on the consolidated return for calendar year
2022.
(3) Example 3. Corporations P and S1 file a
consolidated return for the first time for calendar
year 2021 and file their second consolidated return
for calendar year 2022. Corporation S2 becomes
a member of the group on July 1, 2023, and joins
in the filing of the consolidated return for calendar
year 2023. Under paragraph (b)(2) of this section, in
determining whether the group (which now includes
S2) comes within the exception provided in section
6655(d)(1)(B)(ii) for 2023, the “tax shown on the
return” is the tax shown on the consolidated return
for calendar year 2022. Any tax of S2 for any sep-
arate return year is not included as a part of the “tax
shown on the return” for purposes of applying sec-
tion 6655(d)(1)(B)(ii).
(4) Example 4. Corporations X and Y file consol-
idated returns for the calendar years 2021 and 2022
and separate returns for calendar year 2023. Under
paragraph (b)(3) of this section, in determining
whether X or Y comes within the exception provided
in section 6655(d)(1)(B)(ii) for 2023, the “tax shown
on the return” is the amount of tax shown on the con-
solidated return for 2022 allocable to X and to Y in
accordance with paragraph (b)(6) of this section.
(d) Cross-references—(1) For provi-
sions relating to quick refunds of corporate
estimated tax payments, see §§1.1502-78
and 1.6425-1 through 1.6425-3.
(2) For provisions relating to deposit-
ing estimated taxes, see §1.6302-1(b).
(e) Applicability date. This section
applies to any taxable year for which the
due date of the income tax return (with-
out regard to extensions) is on or after
the date final regulations are published
in the Federal Register. For prior
years, see §1.1502-5 (as contained in
the 26 CFR edition revised as of April
1, 2023).
§1.1502-6 [Amended]
Par. 11. Section 1.1502-6 is amended by
removing the text “he” from paragraph (b)
and adding the text “the Commissioner”
in its place.
Par. 12. Section 1.1502-9 is amended
by:
1. Removing the text “§1.904-4(m)”
from paragraph (a) and adding the text
“§1.904-5(a)(4)(v)” in its place.
2. Removing the text “(a)(8)” from the
first sentence of paragraph (b)(1) and add-
ing the text “(a)(6)” in its place.
3. Removing the text “§§1.861-9T(g)
(3) and 1.861-12T” from the second sen-
tence of paragraph (c)(2)(ii) and adding
the text “§§1.861-9T(g)(3), 1.861-12, and
1.861-13” in its place.
4. Removing the text Ҥ1.861-9T(g)
(1)” from paragraph (c)(2)(ii) wherever it
appears and adding the text Ҥ1.861-9(g)
(1)” in its place.
5. Removing the text “, fair market
value,” from the sixth sentence of para-
graph (c)(2)(ii).
6. Removing the text Ҥ1.861-9T(g)
(2))” from paragraph (c)(2)(ii) wherever it
appears and adding the text Ҥ1.861-9(g)
(2))” in its place.
7. Removing the text “If the group uses
the tax book value method, the” from the
eighth sentence of paragraph (c)(2)(ii) and
adding the text “The” in its place.
8. Revising the heading of paragraph
(c)(2)(iii).
9. Removing the text “a group uses the
tax book value method of valuing assets
for purposes of paragraph (c)(2)(ii) of this
section and” from the first sentence of
paragraph (c)(2)(iii).
§1.1502-9 Consolidated overall foreign
losses, separate limitation losses, and
overall domestic losses.
* * * * *
(c) * * *
(2) * * *
(iii) Limitation on member’s portion.
* * *
* * * * *
Par. 13. Section 1.1502-11 is amended
by:
1. Revising the introductory text in
paragraph (a).
2. Revising paragraphs (a)(2) through
(4).
3. Adding the text “and” at the end of
paragraph (a)(5).
4. Removing paragraph (a)(6).
5. Redesignating paragraph (a)(7) as
paragraph (a)(6).
6. In newly redesignated paragraph (a)
(6), removing the text “; and”, and adding
the text “.” in its place.
7. Removing paragraph (a)(8).
8. In paragraph (b)(2)(iii), designating
Examples 1 through 3 as paragraphs (b)(2)
(iii)(A) through (C), respectively.
9. In newly redesignated paragraphs
(b)(2)(iii)(A) through (C), further redesig-
nating the paragraphs in the first column
as the paragraphs in the second column:
Old ParagraphsNew Paragraphs
(b)(2)(iii)(A)(a), (b), and (c)....................
(b)(2)(iii)(A)(1), (2), and (3)
(b)(2)(iii)(B)(a), (b), (c), and (d)...............
(b)(2)(iii)(B)(1), (2), (3), and (4)
(b)(2)(iii)(C)(a), (b), (c), (d), and (e).........
(b)(2)(iii)(C)(1), (2), (3), (4), and (5)
10. Removing the text “(or 1.1502-
79A, as appropriate)” from newly redes-
ignated paragraphs (b)(2)(iii)(A)(3) and
(b)(2)(iii)(B)(4).
11. Removing the last sentence of para-
graph (c)(7).
The revisions read as follows:
§1.1502-11 Consolidated taxable
income.
(a) In general. The consolidated tax-
able income (CTI) for a consolidated
return year is determined by taking into
account:
* * * * *
(2) Any consolidated net operating loss
(CNOL) deduction (see §1.1502-21 for
the computation of the CNOL deduction);
(3) Any consolidated capital gain
net income (see §1.1502-22 for the

Bulletin No. 2023–34 587 August 21, 2023
computation of consolidated capital gain
net income);
(4) Any consolidated section 1231 net
loss (see §1.1502-23 for the computation
of consolidated section 1231 net loss);
* * * * *
Par. 14. Section 1.1502-12 is amended
by:
1. Revising paragraph (b).
2. Removing and reserving paragraphs
(e), (g), and (m).
3. Revising paragraph (n).
4. Removing and reserving paragraph
(q).
The revisions read as follows:
§1.1502-12 Separate taxable income.
* * * * *
(b) Any deduction that is disallowed
under §1.1502-15 must be taken into
account as provided in that section.
* * * * *
(n) No deduction under section 243(a)
(1) or section 245 (relating to deductions
with respect to dividends received) is
taken into account;
* * * * *
Par. 15. Section 1.1502-13 is amended
by:
1. Revising the second sentence of
paragraph (a)(3)(i).
2. Revising paragraph (a)(6)(ii).
3. Adding the text “of this section”
after the text “paragraph (c)(4)(i)(A)” in
the first sentence of paragraph (c)(4)(i)
(B).
4. Revising the last sentence of para-
graph (c)(5).
5. In paragraph (d)(3), designating
Examples 1 through 5 as paragraphs (d)
(3)(i) through (v), respectively.
6. In newly redesignated paragraphs
(d)(3)(i) through (v), further redesignating
paragraphs in the first column as para-
graphs in the second column:
Old ParagraphsNew Paragraphs
(d)(3)(i)(a), (b), (c), (d), (e), (f), and (g).....(d)(3)(i)(A), (B), (C), (D), (E), (F), and (G)
(d)(3)(ii)(a), (b), and (c).........................(d)(3)(ii)(A), (B), and (C)
(d)(3)(iii)(a) and (b)..............................(d)(3)(iii)(A) and (B)
(d)(3)(iv)(a), (b), and (c)........................(d)(3)(iv)(A), (B), and (C)
(d)(3)(v)(a) and (b)...............................(d)(3)(v)(A) and (B)
7. In paragraph (d)(3), for each newly
redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(d)(3)(i)(E)
paragraph (a) of this Example 1paragraph (d)(3)(i)(A) of this section (Example 1)
(d)(3)(i)(F)
paragraph (a) of this Example 1paragraph (d)(3)(i)(A) of this section (Example 1)
(d)(3)(i)(G)
paragraph (a) of this Example 1paragraph (d)(3)(i)(A) of this section (Example 1)
(d)(3)(ii)(C)
paragraph (a) of this Example 2paragraph (d)(3)(ii)(A) of this section (Example 2)
8. In paragraph (e)(1)(v), designating
Examples 1 through 3 as paragraphs (e)(1)
(v)(A) through (C), respectively.
9. In newly redesignated para-
graphs (e)(1)(v)(A) through (C), further
redesignating paragraphs in the first col-
umn as paragraphs in the second column:
Old ParagraphsNew Paragraphs
(e)(1)(v)(A)(a), (b), (c)(i), (c)(ii), (d), and (e)..................
(e)(1)(v)(A)(1), (2), (3)(i), (3)(ii), (4), and (5)
(e)(1)(v)(B)(a), (b)(i), (b)(ii), and (c)............................
(e)(1)(v)(B)(1), (2)(i), (2)(ii), and (3)
(e)(1)(v)(C)(a) and (b).............................................
(e)(1)(v)(C)(1) and (2)
10. In paragraph (e)(1)(v), for each
newly redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(e)(1)(v)(A)(4)paragraph (a) of this Example 1paragraph (e)(1)(v)(A)(1) of this section (Example 1)
(e)(1)(v)(A)(5)paragraph (a) of this Example 1paragraph (e)(1)(v)(A)(1) of this section (Example 1)
(e)(1)(v)(B)(1)Example 1paragraph (e)(1)(v)(A)(1) of this section (Example 1)
(e)(1)(v)(B)(3)paragraph (a) of this Example 2paragraph (e)(1)(v)(B)(1) of this section (Example 2)

August 21, 2023 588 Bulletin No. 2023–34
11. Removing the second sentence
from paragraph (f)(5)(ii)(B)(2).
12. Removing the text “In either case,
the” from the third sentence of paragraph
(f)(5)(ii)(B)(2) and adding the text “The”
in its place.
13. Revising paragraph (f)(5)(ii)(F).
14. Revising paragraphs (f)(6)(ii) and
(v).
15. In paragraph (f)(7), designating
Examples 1 through 7 as paragraphs (f)(7)
(i) through (vii), respectively.
16. In newly redesignated paragraphs
(f)(7)(i) through (vii), further redesignat-
ing paragraphs in the first column as para-
graphs in the second column:
Old ParagraphsNew Paragraphs
(f)(7)(i)(a), (b), (c), (d), and (e)................(f)(7)(i)(A), (B),(C), (D), and (E)
(f)(7)(ii)(a), (b), (c), (d), (e), (f), and (g).....(f)(7)(ii)(A), (B), (C), (D), (E), (F), and (G)
(f)(7)(iii)(a), (b), (c), and (d)...................(f)(7)(iii)(A), (B), (C), and (D)
(f)(7)(iv)(a) and (b)..............................(f)(7)(iv)(A) and (B)
(f)(7)(v)(a), (b), (c), and (d)....................(f)(7)(v)(A), (B), (C), and (D)
(f)(7)(vi)(a), (b), and (c).........................(f)(7)(vi)(A), (B), and (C)
(f)(7)(vii)(a), (b), (c), and (d)...................(f)(7)(vii)(A), (B), (C), and (D)
17. In paragraph (f)(7), for each newly
redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(f)(7)(i)(D)
paragraph (a) of this Example 1paragraph (f)(7)(i)(A) of this section (Example 1)
(f)(7)(i)(E)
paragraph (a) of this Example 1paragraph (f)(7)(i)(A) of this section (Example 1)
(f)(7)(ii)(D)
paragraph (a) of this Example 2paragraph (f)(7)(ii)(A) of this section (Example 2)
(f)(7)(ii)(D)
paragraph (c) of this Example 2paragraph (f)(7)(ii)(C) of this section (Example 2)
(f)(7)(ii)(E)
paragraph (a) of this Example 2paragraph (f)(7)(ii)(A) of this section (Example 2)
(f)(7)(ii)(F)
paragraph (a) of this Example 2paragraph (f)(7)(ii)(A) of this section (Example 2)
(f)(7)(ii)(F)
paragraph (c) of this Example 2paragraph (f)(7)(ii)(C) of this section (Example 2)
(f)(7)(ii)(F)
paragraph (d) of this Example 2paragraph (f)(7)(ii)(D) of this section (Example 2)
(f)(7)(ii)(G)
paragraph (a) of this Example 2paragraph (f)(7)(ii)(A) of this section (Example 2)
(f)(7)(ii)(G)
paragraph (c) of this Example 2paragraph (f)(7)(ii)(C) of this section (Example 2)
(f)(7)(iii)(C)
paragraph (a) of this Example 3paragraph (f)(7)(iii)(A) of this section (Example 3)
(f)(7)(iii)(C)
paragraph (b) of this Example 3paragraph (f)(7)(iii)(B) of this section (Example 3)
(f)(7)(v)(C)
paragraph (a) of this Example 4paragraph (f)(7)(v)(A) of this section (Example 5)
(f)(7)(v)(C)
paragraph (b) of this Example 4paragraph (f)(7)(v)(B) of this section (Example 5)
(f)(7)(v)(D)
paragraph (a) of this Example 4paragraph (f)(7)(v)(A) of this section (Example 5)
(f)(7)(vi)(C)
paragraph (a) of this Example 5paragraph (f)(7)(vi)(A) of this section (Example 6)
(f)(7)(vii)(C)
paragraph (a) of this Example 6paragraph (f)(7)(vii)(A) of this section (Example 7)
(f)(7)(vii)(C)
paragraph (b) of this Example 6paragraph (f)(7)(vii)(B) of this section (Example 7)
(f)(7)(vii)(D)
paragraph (c) of this Example 6paragraph (f)(7)(vii)(C) of this section (Example 7)
18. In paragraph (g)(7)(ii), designating
Examples 1 through 11 as paragraphs (g)
(7)(ii)(A) through (K), respectively.
19. In newly redesignated para-
graphs (g)(7)(ii)(A) through (K), further
redesignating paragraphs in the first col-
umn as paragraphs in the second column:

Bulletin No. 2023–34 589 August 21, 2023
Old ParagraphsNew Paragraphs
(g)(7)(ii)(A)(i), (ii), (iii), and (iv)
...................................................................
(g)(7)(ii)(A)(1), (2), (3), and (4)
(g)(7)(ii)(B)(i), (ii), (iii), (iv), (v), (vi), (vii), and (viii)
.................................
(g)(7)(ii)(B)(1), (2), (3), (4), (5), (6), (7), and (8)
(g)(7)(ii)(C)(i), (ii), (iii), and (iv)
...................................................................
(g)(7)(ii)(C)(1), (2), (3), and (4)
(g)(7)(ii)(D)(i), (ii), (iii), (iv), and (v)
............................................................
(g)(7)(ii)(D)(1), (2), (3), (4), and (5)
(g)(7)(ii)(E)(i) and (ii)
....................................................................................
(g)(7)(ii)(E)(1) and (2)
(g)(7)(ii)(F)(i) and (ii)
....................................................................................
(g)(7)(ii)(F)(1) and (2)
(g)(7)(ii)(G)(i) and (ii)
...................................................................................
(g)(7)(ii)(G)(1) and (2)
(g)(7)(ii)(H)(i) and (ii)
...................................................................................
(g)(7)(ii)(H)(1) and (2)
(g)(7)(ii)(I)(i) and (ii)
.....................................................................................
(g)(7)(ii)(I)(1) and (2)
(g)(7)(ii)(J)(i), (ii), (iii), and (iv)
....................................................................
(g)(7)(ii)(J)(1), (2), (3), and (4)
(g)(7)(ii)(K)(i), (ii), and (iii)
..........................................................................
(g)(7)(ii)(K)(1), (2), and (3)
20. In paragraph (g)(7)(ii), for each
newly redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(g)(7)(ii)(A)(3)paragraph (i) of this Example 1paragraph (g)(7)(ii)(A)(1) of this section (Example 1)
(g)(7)(ii)(A)(3)paragraph (ii) of this Example 1paragraph (g)(7)(ii)(A)(2) of this section (Example 1)
(g)(7)(ii)(A)(4)paragraph (i) of this Example 1paragraph (g)(7)(ii)(A)(1) of this section (Example 1)
(g)(7)(ii)(A)(4)paragraph (ii) of this Example 1paragraph (g)(7)(ii)(A)(2) of this section (Example 1)
(g)(7)(ii)(B)(3)paragraph (i) of this Example 2paragraph (g)(7)(ii)(B)(1) of this section (Example 2)
(g)(7)(ii)(B)(3)paragraph (ii) of this Example 2paragraph (g)(7)(ii)(B)(2) of this section (Example 2)
(g)(7)(ii)(B)(4)paragraph (i) of this Example 2paragraph (g)(7)(ii)(B)(1) of this section (Example 2)
(g)(7)(ii)(B)(4)
paragraph (iii) of this Example 2
paragraph (g)(7)(ii)(B)(3) of this section (Example 2)
(g)(7)(ii)(B)(5)paragraph (i) of this Example 2paragraph (g)(7)(ii)(B)(1) of this section (Example 2)
(g)(7)(ii)(B)(6)same as paragraph (i) of this Example 2same as in paragraph (g)(7)(ii)(B)(1) of this section
(Example 2)
(g)(7)(ii)(B)(6)paragraph (ii) of this Example 2paragraph (g)(7)(ii)(B)(2) of this section (Example 2)
(g)(7)(ii)(B)(7)paragraph (i) of this Example 2paragraph (g)(7)(ii)(B)(1) of this section (Example 2)
(g)(7)(ii)(B)(8)paragraph (i) of this Example 2
paragraph (g)(7)(ii)(B)(1) of this section (Example 2)
(g)(7)(ii)(C)(3)paragraph (i) of this Example 3paragraph (g)(7)(ii)(C)(1) of this section (Example 3)
(g)(7)(ii)(C)(3)paragraph (ii) of this Example 3paragraph (g)(7)(ii)(C)(2) of this section (Example 3)
(g)(7)(ii)(C)(4)paragraph (i) of this Example 3paragraph (g)(7)(ii)(C)(1) of this section (Example 3)
(g)(7)(ii)(C)(4)paragraph (ii) of this Example 3paragraph (g)(7)(ii)(C)(2) of this section (Example 3)
(g)(7)(ii)(C)(4)paragraph (ii) of this Example 3paragraph (g)(7)(ii)(C)(2) of this section (Example 3)
(g)(7)(ii)(D)(3)paragraph (i) of this Example 4paragraph (g)(7)(ii)(D)(1) of this section (Example 4)
(g)(7)(ii)(D)(4)paragraph (i) of this Example 4paragraph (g)(7)(ii)(D)(1) of this section (Example 4)
(g)(7)(ii)(D)(5)paragraph (i) of this Example 4paragraph (g)(7)(ii)(D)(1) of this section (Example 4)
(g)(7)(ii)(J)(2)paragraph (iii) of Example 1 of this
paragraph (g)(7)
paragraph (g)(7)(ii)(A)(3) of this section (Example 1)
(g)(7)(ii)(J)(3)paragraph (i) of this Example 10paragraph (g)(7)(ii)(J)(1) of this section (Example 10)
(g)(7)(ii)(K)(3)paragraph (i) of this Example 11paragraph (g)(7)(ii)(K)(1) of this section (Example 11)

August 21, 2023 590 Bulletin No. 2023–34
21. Redesignating paragraphs (h)(2)(v)
(a) and (b) as paragraphs (h)(2)(v)(A) and
(B).
22. In paragraph (j)(9), designating
Examples 1 through 7 as paragraphs (j)(9)
(i) through (vii), respectively.
23. In newly redesignated paragraphs
(j)(9)(i) through (vii), further redesignat-
ing paragraphs in the first column as para-
graphs in the second column:
Old ParagraphsNew Paragraphs
(j)(9)(i)(a), (b), (c), (d), and (e)................(j)(9)(i)(A), (B), (C), (D), and (E)
(j)(9)(ii)(a) and (b)................................(j)(9)(ii)(A) and (B)
(j)(9)(iii)(a), (b), and (c)..........................(j)(9)(iii)(A), (B), and (C)
(j)(9)(iv)(a), (b), (c), (d), and (e)...............(j)(9)(iv)(A), (B), (C), (D), and (E)
(j)(9)(v)(a) and (b)................................(j)(9)(v)(A) and (B)
(j)(9)(vi)(a) and (b)...............................(j)(9)(vi)(A) and (B)
(j)(9)(vii)(a) and (b)...............................(j)(9)(vii)(A) and (B)
24. In paragraph (j)(9), for each newly
redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(j)(9)(i)(E)
paragraph (a) of this Example 1paragraph (j)(9)(i)(A) of this section (Example 1)
(j)(9)(iv)(D)
paragraph (a) of this Example 4paragraph (j)(9)(iv)(A) of this section (Example 1)
(j)(9)(iv)(E)
paragraph (a) of this Example 4paragraph (j)(9)(iv)(A) of this section (Example 1)
25. Revising paragraph (l)(6).
26. Redesignating paragraph (m) as
paragraph (l)(7).
27. Revising newly redesignated para-
graph (l)(7).
28. Adding paragraphs (l)(8) and (9).
The revisions and additions read as
follows:
§1.1502-13 Intercompany transactions.
* * *
(3) * * *
(i) * * * See §§1.1502-17 and 1.446-
1(c)(2)(iii). * * *
* * * * *
(6) * * *
(ii) Table of examples. This section
contains the following examples:
RuleGeneral LocationParagraphExample
(A) Matching rule. §1.1502-13(c)(7)(ii)(A)Example 1. Intercompany sale of land followed by sale to a
nonmember.
(B)Example 2. Dealer activities.
(C)Example 3. Intercompany section 351 transfer.
(D)Example 4. Depreciable property.
(E)Example 5. Intercompany sale followed by installment sale.
(F)Example 6. Intercompany sale of installment obligation.
(G)Example 7. Performance of services.
(H)Example 8. Rental of property.
(I)Example 9. Intercompany sale of a partnership interest.
(J)Example 10. Net operating losses subject to section 382 or
the SRLY rules.
(K)Example 11. Section 475.
(L)Example 12. Section 1092.
(M)Example 13. [Reserved]
(N)Example 14. Source of income under section 863.

Bulletin No. 2023–34 591 August 21, 2023
RuleGeneral LocationParagraphExample
(O)Example 15. Section 1248.
(P)Example 16. Intercompany stock distribution followed by
section 332 liquidation.
(Q)Example 17. Intercompany stock sale followed by section
355 distribution.
(R)Example 18. Redetermination of attributes for section 250
purposes.
(B) Acceleration rule.§1.1502-13(d)(3)(i)Example 1. Becoming a nonmember—timing.
(ii)Example 2. Becoming a nonmember—attributes.
(iii)Example 3. Selling member’s disposition of installment
note.
(iv)Example 4. Cancellation of debt and attribute reduction
under section 108(b).
(v)Example 5. Section 481.
(C) Simplifying
rules—inventory.
§1.1502-13(e)(1)(v)(A)Example 1. Increment averaging method.
(B)Example 2. Increment valuation method.
(C)Example 3. Other reasonable inventory methods.
(D) Stock of members.§1.1502-13(f)(7)(i)Example 1. Dividend exclusion and property distribution.
(ii)Example 2. Excess loss accounts.
(iii)Example 3. Intercompany reorganization.
(iv)Example 4. All cash intercompany reorganization under
section 368(a)(1)(D).
(v)Example 5. Stock redemptions and distributions.
(vi)Example 6. Intercompany stock sale followed by section 332
liquidation.
(vii)Example 7. Intercompany stock sale followed by section 355
distribution.
(E) Obligations of
members.
§1.1502-13(g)(7)(ii)(A)Example 1. Interest on intercompany obligation.
(B)Example 2. Intercompany obligation becomes
nonintercompany obligation.
(C)Example 3. Loss or bad debt deduction with respect to
intercompany obligation.
(D)Example 4. Intercompany nonrecognition transactions.
(E)Example 5. Assumption of intercompany obligation.
(F)Example 6. Extinguishment of intercompany obligation.
(G)Example 7. Exchange of intercompany obligations.
(H)Example 8. Tax benefit rule.
(I)Example 9. Issuance at off-market rate of interest.
(J)Example 10. Nonintercompany obligation becomes
intercompany obligation.
(K)Example 11. Notional principal contracts.
(F) Anti-avoidance
rules.
§1.1502-13(h)(2)(i)Example 1. Sale of a partnership interest.
(ii)Example 2. Transitory status as an intercompany obligation.
(iii)Example 3. Corporate mixing bowl.

August 21, 2023 592 Bulletin No. 2023–34
RuleGeneral LocationParagraphExample
(iv)Example 4. Partnership mixing bowl.
(v)Example 5. Sale and leaseback.
(vi)Example 6. Section 163(j) interest limitation.
(G) Miscellaneous
operating rules.
§1.1502-13(j)(9)(i)Example 1. Intercompany sale followed by section 351
transfer to member.
(ii)Example 2. Intercompany sale of member stock followed by
recapitalization.
(iii)Example 3. Back-to-back intercompany
transactions—matching.
(iv)Example 4. Back-to-back intercompany
transactions—acceleration.
(v)Example 5. Successor group.
(vi)Example 6. Liquidation—80% distributee.
(vii)Example 7. Liquidation—no 80% distributee.
* * * * *
(c) * * *
(5) * * * For other special status issues,
see, for example, sections 818(b) (life
insurance company treatment of capital
gains and losses) and 1503(c) (limitation
on absorption of certain losses).
* * * * *
(f) * * *
(5) * * *
(ii) * * *
(F) Applicability date. Paragraphs (f)
(5)(ii)(B)(1) and (2) of this section apply
to transactions in which old T’s liquida-
tion into B occurs on or after October 25,
2007.
(6) * * *
(ii) Gain stock. For dispositions of P
stock, see §1.1032-3.
* * * * *
(v) Applicability date. This paragraph
(f)(6) applies to gain or loss taken into
account on or after July 12, 1995, and to
transactions occurring on or after July 12,
1995.
* * * * *
(l) * * *
(6) Applicability date regarding para-
graph (f)(7)(iv) of this section (Example
4). Paragraph (f)(7)(iv) of this section
(Example 4) applies to transactions occur-
ring on or after December 18, 2009.
(7) Election to apply paragraph (f)
(5)(ii) of this section to an intercom-
pany 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.
(8) Election to reduce basis of parent
stock under paragraph (f)(6) of this sec-
tion. Paragraph (f)(6)(i)(C)(2) of this sec-
tion applies to any original consolidated
Federal income tax return due (without
extensions) after June 14, 2007.
(9) 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.
§1.1502-17 [Amended]
Par. 16. Section 1.1502-17 is amended
by removing the last sentence of para-
graph (a) and the second sentence of para-
graph (e).
§1.1502-18 [Removed]
Par. 17. Section 1.1502-18 is removed.
Par. 18. Section 1.1502-21 is amended
by:
1. In paragraph (b)(3)(i), removing
the fourth sentence and revising the last
sentence.
2. In paragraph (b)(4), removing
the fifth sentence and revising the last
sentence.
3. Removing and reserving paragraph
(d).
4. Removing the last three sentences of
paragraph (h)(6).
5. Removing the second sentence of
paragraph (h)(8).
The revisions read as follows:
§1.1502-21 Net operating losses.
* * * * *
(b) * * *
(3) * * *
(i) * * * The election may be made in
an unsigned statement.
(ii) * * *
(B) * * * The election may be made in
an unsigned statement.
* * * * *
§ 1.1502-22 [Amended]
Par. 19. Section 1.1502-22 is amended
by removing and reserving paragraph (d).
Par. 20. Section 1.1502-24 is amended
by:
1. Revising paragraph (a)(2).
2. Removing the text “section 242,
section 243(a)(2) and (3), § 1.1502-25,
§ 1.1502-26, and § 1.1502-27,” from
paragraph (c) and adding the text “section
243(a)(2) and (3) and §1.1502-26,” in its
place.
The revision reads as follows:
§1.1502-24 Consolidated charitable
contributions deduction.
(a) * * *

Bulletin No. 2023–34 593 August 21, 2023
(2) The percentage limitation on the
total charitable contribution deduction
provided in section 170(b)(2)(A) applied
to adjusted consolidated income as deter-
mined under paragraph (c) of this section.
* * * * *
Par. 21. Section 1.1502-26 is amended
by:
1. Revising paragraph (a).
2. Designating Examples 1 and 2 in
paragraph (c) as paragraphs (c)(1) and (2),
respectively.
3. Revising newly designated para-
graphs (c)(1) and (2).
The revisions read as follows:
§1.1502-26 Consolidated dividends
received deduction.
(a) In general. The consolidated divi-
dends received deduction for the taxable
year is the lesser of—
(1) The aggregate of the deduction of
the members of the group allowable under
sections 243(a)(1), 245(a) and (b), and
250 (computed without regard to the lim-
itations provided in section 246(b)), or
(2) The aggregate amount described in
section 246(b), determined by substitut-
ing, wherever it appears—
(i) The term consolidated taxable
income for taxable income,
(ii) The term consolidated net operat-
ing loss for net operating loss, and
(iii) The term consolidated net capital
loss for capital loss.
* * * * *
(c) * * *
(1) Example 1. Corporations P, S, and S-1 filed
a consolidated return for the calendar year 2023
showing consolidated taxable income of $100,000
(determined without regard to the consolidated net
operating loss deduction, and the consolidated div-
idends received deduction). These corporations
received dividends during such year from less than
20-percent owned domestic corporations as follows:
Table 1 to paragraph (c)(1)
CorporationDividends
P$6,000
S$10,000
S-1$34,000
Total$50,000
The dividends received deduction allowable to
each member under section 243(a)(1) (computed
without regard to the limitation in section 246(b))
is as follows: P has $3,000 (50 percent of $6,000),
S has $5,000 (50 percent of $10,000), and S-1
has $17,000 (50 percent of $34,000), or a total of
$25,000. Since $25,000 is less than $50,000 (50
percent of $100,000), the consolidated dividends
received deduction is $25,000.
(2) Example 2. Assume the same facts as in
paragraph (c)(1) of this section (Example 1), except
that consolidated taxable income (computed without
regard to the consolidated net operating loss deduc-
tion and the consolidated dividends received deduc-
tion) was $40,000. The aggregate of the dividends
received deductions, $42,500, computed without
regard to section 246(b), results in a consolidated
net operating loss of $2,500. See section 172(d)
(5). Therefore, paragraph (a)(2) of this section does
not apply and the consolidated dividends received
deduction is $42,500.
§1.1502-27 [Removed]
Par. 22. Section 1.1502-27 is removed.
Par. 23. Section 1.1502-32 is amended
by:
1. Revising paragraphs (b)(4)(v) and
(vii).
2. In paragraph (b)(5)(ii), designating
Examples 1 through 10 as paragraphs (b)
(5)(ii)(A) through (J), respectively.
3. In newly redesignated paragraphs
(b)(5)(ii)(A) through (J), further redesig-
nating paragraphs in the first column as
paragraphs in the second column:
Old ParagraphsNew Paragraphs
(b)(5)(ii)(A)(a), (b), and (c).....................
(b)(5)(ii)(A)(1), (2), and (3)
(b)(5)(ii)(B)(a), (b), (c), and (d)...............
(b)(5)(ii)(B)(1), (2), (3), and (4)
(b)(5)(ii)(C)(a) and (b)........................
(b)(5)(ii)(C)(1) and (2)
(b)(5)(ii)(D)(a), (b), (c), and (d)...............
(b)(5)(ii)(D)(1), (2), (3), and (4)
(b)(5)(ii)(E)(a), (b), and (c)....................
(b)(5)(ii)(E)(1), (2), and (3)
(b)(5)(ii)(F)(i) and (ii)............................
(b)(5)(ii)(F)(1) and (2)
(b)(5)(ii)(H)(a), (b), and (c)....................
(b)(5)(ii)(H)(1), (2), and (3)
(b)(5)(ii)(I)(a), (b), and (c).....................
(b)(5)(ii)(I)(1), (2), and (3)
(b)(5)(ii)(J)(a), (b), and (c).....................
(b)(5)(ii)(J)(1), (2), and (3)
4. Removing the text “is treated as a
dividend under section 356(a)(2)” from
the last sentence of newly designated para-
graph (b)(5)(ii)(F)(1) and adding the text
“is treated as received by M in a separate
transaction occurring immediately after
the merger of T into S” in its place.
5. In paragraph (b)(5), for each newly
redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:

August 21, 2023 594 Bulletin No. 2023–34
ParagraphRemoveAdd
(b)(5)(ii)(A)(2)paragraph (a) of this Example 1paragraph (b)(5)(ii)(A)(1) of this section (Example 1)
(b)(5)(ii)(A)(3)paragraph (b) of this Example 1paragraph (b)(5)(ii)(A)(2) of this section (Example 1)
(b)(5)(ii)(B)(2)paragraph (a) of this Example 2paragraph (b)(5)(ii)(B)(1) of this section (Example 2)
(b)(5)(ii)(B)(3)paragraph (a) of this Example 2paragraph (b)(5)(ii)(B)(1) of this section (Example 2)
(b)(5)(ii)(B)(4)paragraph (a) of this Example 2paragraph (b)(5)(ii)(B)(1) of this section (Example 2)
(b)(5)(ii)(D)(3)paragraph (a) of this Example 4paragraph (b)(5)(ii)(D)(1) of this section (Example 4)
(b)(5)(ii)(E)(2)paragraph (a) of this Example 5paragraph (b)(5)(ii)(E)(1) of this section (Example 5)
(b)(5)(ii)(E)(3)paragraph (a) of this Example 5paragraph (b)(5)(ii)(E)(1) of this section (Example 5)
(b)(5)(ii)(H)(2)paragraph (a) of this Example 8paragraph (b)(5)(ii)(H)(1) of this section (Example 8)
(b)(5)(ii)(I)(3)paragraph (a) of this Example 9paragraph (b)(5)(ii)(I)(1) of this section (Example 9)
6. Removing the last sentence of para-
graph (h)(2)(i).
7. Removing paragraph (h)(5)(i).
8. Redesignating paragraph (h)(5)(ii)
as paragraph (h)(5).
9. Removing the last sentence of para-
graphs (h)(6), (h)(7), and (h)(8).
10. Removing the text “(b)(5)(ii)
Example 6 of this section” from paragraph
(h)(8) and adding the text “(b)(5)(ii)(F) of
this section (Example 6)” in its place.
11. Redesignating paragraph (j) as
paragraph (h)(10).
12. Revising the heading of newly des-
ignated paragraph (h)(10).
13. Removing the last sentence of
newly designated paragraph (h)(10).
14. Removing paragraph (k).
The revisions read as follows:
§1.1502-32 Investment adjustments.
* * * * *
(b) * * *
(4) * * *
(v) Special rule for loss carryovers of
a subsidiary acquired in a transaction for
which an election under §1.1502-20(i)
(2) is made. See paragraph (b)(4)(v) of
this section as contained in 26 CFR part 1
revised as of April 1, 2005.
* * * * *
(vii) Special rules for amending waiver
of loss carryovers from separate return
limitation year relating to the acquisition
of a subsidiary in a transaction subject to
§1.1502-20. See paragraph (b)(4)(vii) of
this section as contained in 26 CFR part 1
revised as of April 1, 2005.
* * * * *
(h) * * *
(10) Election to treat loss carry-
over as expiring. * * *
* * * * *
Par. 24. Section 1.1502-34 is revised to
read as follows:
§1.1502-34 Special aggregate stock
ownership rules.
(a) Determination of stock owner-
ship—(1) Aggregation rule. For purposes
of the consolidated return regulations,
in determining the stock ownership of a
member of a group in another corpora-
tion (issuing corporation) for purposes
of determining the application of section
165(g)(3)(A), section 332(b)(1), section
351(a), section 732(f), or section 904(f)
in a consolidated return year, stock in the
issuing corporation owned by all other
members of the group is included. For
the determination of whether a member
of the group is an 80-percent distributee,
see section 337(c) (providing that, for pur-
poses of section 337, the determination of
whether any corporation is an 80-percent
distributee is made without regard to any
consolidated return regulation).
(2) Example regarding liquidation of member.
The following example illustrates the stock owner-
ship aggregation rule set forth in paragraph (a)(1) of
this section.
(i) Facts. P wholly owns A, B, and C, each of
which is a member of the P group. A, B, and C each
owns 33 1/3 percent of the stock of D. D liquidates
in a transaction purported to qualify under section
332.
(ii) Analysis. For purposes of determining sat-
isfaction of the 80-percent stock ownership require-
ment under section 332(b)(1), under the stock
ownership aggregation rule set forth in paragraph (a)
(1) of this section: A is treated as owning all of the D
stock owned by B and C; B is treated as owning all
of the D stock owned by A and C; and C is treated
as owning all of the D stock owned by A and B.
Therefore, each of A, B, and C is treated as own-
ing 100 percent of the stock of D and thus meeting
the 80-percent stock ownership requirement for pur-
poses of section 332. However, none of A, B, or C
is treated as an 80-percent distributee for purposes of
section 337. See section 337(c). Therefore, section
337(a) does not apply.
(b) [Reserved]
§1.1502-42 [Removed]
Par. 25. Section 1.1502-42 is removed.
Par. 26. Section 1.1502-43 is amended
by:
1. Revising paragraphs (b)(2)(iii)
through (vi), the last sentence of paragraph
(b)(2)(vii), and paragraph (b)(2)(viii).
2. Removing the last two sentences of
paragraph (e).
The revisions read as follows:
§1.1502-43 Consolidated accumulated
earnings tax.
* * * * *
(b) * * *
(2) * * *
(iii) Under section 535(b)(3), the
deduction determined under §1.1502-26
is not allowed.
(iv) Under section 535(b)(4), the con-
solidated net operating loss deduction
described in §1.1502-21(a) is not allowed.
(v) Under section 535(b)(5), there
is allowed as a deduction the consoli-
dated net capital loss, determined under
§1.1502-22(a).
(vi) Under section 535(b)(6), there is
allowed as a deduction an amount equal
to—

Bulletin No. 2023–34 595 August 21, 2023
(A) The consolidated capital gain net
income for the taxable year (determined
under §1.1502-22(a) and without the con-
solidated net capital loss carryovers and
carrybacks to the taxable year), minus
(B) The taxes attributable to such gain.
(vii) * * * See §1.1502-22(b).
(viii) Section 1.1502-15 does not apply.
* * * * *
Par. 27. Section 1.1502-44 is amended
by:
1. Removing the text “.” from the end
of paragraph (b)(1) and adding the text “;”
in its place.
2. Revising paragraphs (b)(2) and (3).
The revisions read as follows:
§1.1502-44 Percentage depletion for
independent producers and royalty
owners.
* * * * *
(b) * * *
(2) Any consolidated net operating loss
carryback to the consolidated return year
under §1.1502-21; and
(3) Any consolidated net capital loss
carryback to the consolidated return year
under §1.1502-22.
* * * * *
Par. 28. Section 1.1502-45 is added to
read as follows:
§1.1502-45 Limitation on losses to
amount at risk.
(a) In general—(1) Scope. This section
applies to a loss of any subsidiary if the
common parent’s stock meets the stock
ownership requirement described in sec-
tion 465(a)(1)(B.
(2) Limitation on use of losses. Except
as provided in paragraph (a)(4) of this
section, a loss from an activity of a sub-
sidiary during a consolidated return year
is includible in the computation of consol-
idated taxable income (or consolidated net
operating loss) and consolidated capital
gain net income (or consolidated net cap-
ital loss) only to the extent the loss does
not exceed the amount that the parent is
at risk in the activity at the close of that
subsidiary’s taxable year. In addition, the
sum of a subsidiary’s losses from all its
activities is includible only to the extent
that the parent is at risk in the subsidiary at
the close of that year. Any excess may not
be taken into account for the consolidated
return year but will be treated as a deduc-
tion allocable to that activity of the sub-
sidiary in the first succeeding taxable year.
(3) Amount parent is at risk in sub-
sidiary’s activity. The amount the parent
is at risk in an activity of a subsidiary is
the lesser of the amount the parent is at
risk in the subsidiary, or the amount the
subsidiary is at risk in the activity. These
amounts are determined under paragraph
(b) of this section and the principles of
section 465. See section 465 and the reg-
ulations thereunder and the examples in
paragraph (e) of this section.
(4) Excluded activities. The limitation
on the use of losses in paragraph (a)(2) of
this section does not apply to a loss attrib-
utable to an activity described in section
465(c)(4).
(5) Substance over form. Any trans-
action or arrangement between members
(or between a member and a person that
is not a member) which does not cause
the parent to be economically at risk in
an activity of a subsidiary will be treated
in accordance with the substance of the
transaction or arrangement notwithstand-
ing any other provision of this section.
(b) Rules for determining amount at
risk—(1) Excluded amounts. The amount
a parent is at risk in an activity of a sub-
sidiary at the close of the subsidiary’s
taxable year does not include any amount
that would not be taken into account under
section 465 were the subsidiary not a sepa-
rate corporation. Thus, for example, if the
amount a parent is at risk in the activity of
a subsidiary is attributable to nonrecourse
financing, the amount at risk is not more
than the fair market value of the property
(other than the subsidiary’s stock or debt
or assets) pledged as security.
(2) Guarantees. If a parent guarantees
a loan by a person other than a member to
a subsidiary, the loan increases the amount
the parent is at risk in the activity of the
subsidiary.
(c) Application of section 465. This
section applies in a manner consistent with
the provisions of section 465. Thus, for
example, the recapture of losses provided
in section 465(e) applies if the amount the
parent is at risk in the activity of a subsid-
iary is reduced below zero.
(d) Other consolidated return provi-
sions unaffected. This section limits only
the extent to which losses of a subsidi-
ary may be used in a consolidated return
year. This section does not apply for
other purposes, such as §§1.1502-32 and
1.1502-19, relating to investment in stock
of a subsidiary and excess loss accounts,
respectively. Thus, a loss which reduces a
subsidiary’s earnings and profits in a con-
solidated return year, but is disallowed as
a deduction for the year by reason of this
section, may nonetheless result in a nega-
tive adjustment to the basis of an owning
member’s stock in the subsidiary or create
(or increase) an excess loss account.
(e) Examples. The provisions of this
section may be illustrated by the examples
in this paragraph (e). In each example, the
stock ownership requirement of section
465(a)(1)(B) is met for the stock of the
parent (P), and each affiliated group files
a consolidated return on a calendar year
basis and comprises only the members
described.
(1) Example 1. In 2022, P forms S with a con-
tribution of $200 in exchange for all of S’s stock.
During the year, S borrows $400 from a commer-
cial lender and P guarantees $100 of the loan. S uses
$500 of its funds to acquire a motion picture film. S
incurs a loss of $120 for the year with respect to the
film. At the close of 2022, the amount P is at risk
in S’s activity is $300 ($200 contribution plus $100
guarantee). If S has no gain or loss in 2023, and there
are no contributions from or distributions to P, at the
close of 2023 P’s amount at risk in S’s activity will
be $180.
(2) Example 2. P forms S-1 with a capital con-
tribution of $1 on January 1, 2023. On February
1, 2023. S-1 borrows $100 with full recourse and
contributes all $101 to its newly formed subsidiary
S-2. S-2 uses the proceeds to explore for natural oil
and gas resources. S-2 incurs neither gain nor loss
from its explorations during the taxable year. As of
December 31, 2023, P is at risk in the exploration
activity of S-2 only to the extent of $1.
(f) Applicability date. This section
applies to consolidated return years end-
ing on or after the date of publication
of the Treasury decision adopting these
rules as final regulations in the Federal
Register.
Par. 29. Section 1.1502-47 is amended
by:
1. Italicizing the text “Nonlife insur-
ance company” in the heading of para-
graph (b)(2).
2. Italicizing the text “separate return
limitation year” wherever it appears in
paragraph (b)(11).
3. Adding the text “,” after the text
“base period” in paragraph (b)(12)(i).

August 21, 2023 596 Bulletin No. 2023–34
4. Removing the extra space between
the text “paragraphs (b)(12)” and the text
“(iii) through (vi)” in paragraph (b)(12)(i)
(A).
5. Removing the extra space between
the text “paragraphs (b)(12)” and the text
“(v) and (vi)” in the first sentence of para-
graphs (b)(12)(iii) and (iv).
6. Removing the text “subdivision
(iv)” from the last sentence of paragraph
(b)(12)(iv) and adding the text “paragraph
(b)(12)(iv)” in its place.
7. Removing the extra space between
the text “1.1502-75” and the text “(d)(2)
or (d)(3)” in paragraph (b)(12)(vi).
8. Removing the extra space between
the text “paragraph (b)(12)” and the text
“(ii) through (iv)” in paragraph (b)(12)
(vi).
9. Adding a period after the heading in
paragraph (b)(14).
10. Removing the text “subparagraph
(b)(12)(v)(B) and (E)” from paragraph (b)
(14)(iii) and adding the text “paragraphs
(b)(12)(v)(B) and (D)” in its place.
11. Removing the extra space between
the text “351” and the text “(a)” in para-
graph (b)(14)(iii).
12. Removing the text “the result” from
paragraph (b)(14)(vi) and adding the text
“The result” in its place.
13. Revising paragraph (c)(2)(ii).
14. Removing the text “subdivision (ix)
of this paragraph (h)(3)” from paragraph
(h)(3)(i) and adding the text “paragraph
(h)(3)(ix) of this section” in its place.
15. Removing the text “paragraph (g)
(4)” from paragraph (h)(3)(ii) and adding
the text “paragraph (g)(3)” in its place.
16. Designating the first and second
sentences of the undesignated paragraph
after paragraph (h)(3)(x) as paragraphs (h)
(3)(x)(A) and (B), respectively.
17. Removing the text “(as defined in
paragraph (j) of this section)” from newly
designated paragraph (h)(3)(x)(B).
18. Removing the text “paragraph (f)”
from paragraph (h)(4) and adding the text
“paragraph (h)” in its place.
19. Removing the text “paragraph (f)
(4)(i)” from the first sentence of paragraph
(h)(4)(ii)(A) and adding the text “para-
graph (h)(4)(i)” in its place.
20. Removing the text “paragraph (f)
(3)(vi)” from the third sentence of para-
graph (h)(4)(ii)(A) and adding the text
“paragraph (h)(3)(vi)” in its place.
21. Removing the text “paragraph (f)
(3)(x)” from the fifth sentence of para-
graph (h)(4)(ii)(A) and adding the text
“paragraph (h)(3)(x)” in its place.
22. Removing the text “paragraph (f)
(2)(ii)” from the seventh sentence of para-
graph (h)(4)(ii)(A) and adding the text
“paragraph (h)(2)(ii)” in its place.
23. Removing the text “paragraph (f)
(4)(ii)” from the first sentence of para-
graph (h)(4)(iii) and adding the text “para-
graph (h)(4)(ii)” in its place.
24. Removing the text “paragraph (f)
(3)(vi)” from the fourth sentence of para-
graph (h)(4)(iii) and adding the text “para-
graph (h)(3)(vi)” in its place.
25. Removing the text “paragraph (f)
(3)(ii)” from the fifth sentence of para-
graph (h)(4)(iii) and adding the text “para-
graph (h)(3)(ii)” in its place.
26. Italicizing the text “In” in the head-
ing of paragraph (j)(1).
27. In paragraph (m)(1)(i), remov-
ing the text “or”, and adding the text “or
any successor form” at the end of the
paragraph.
28. Adding the text “or any successor
form,” before the text “whether filed” in
paragraphs (m)(1)(iv) and (m)(1)(v).
The revision reads as follows:
§1.1502-47 Consolidated returns by
life-nonlife groups.
* * * * *
(c) * * *
(2) * * *
(ii) Special rule. Notwithstanding
the general rule, however, if the nonlife
members in the group filed a consoli-
dated return for the immediately preced-
ing taxable year and had executed and
filed a Form 1122 (or successor form)
that is effective for the preceding year,
then such members will be treated as
if they filed a Form 1122 (or succes-
sor form) when they join in the filing
of a consolidated return under section
1504(c)(2) and they will be deemed to
consent to the regulations under this
section. However, an affiliation sched-
ule (Form 851, or any successor form)
must be filed by the group and the life
members must execute a Form 1122
(or successor form) in the manner pre-
scribed in §1.1502-75(h)(2).
* * * * *
Par. 30. Section 1.1502-75 is amended
by:
1. Adding the text “(or successor
form)” after the text “Form 1122” wher-
ever it appears in paragraph (b)(1).
2. Adding the text “(or successor
form”) after the text “Form 851” in para-
graph (b)(2)(iii).
3. Adding the text “(or successor
form)” after the text “Form 1122” wher-
ever it appears in paragraph (b)(3)
4. Revising the second sentence of
paragraph (c)(1)(i).
5. Removing the text “his” from para-
graphs (c)(2)(i) and (ii) and adding the
text “the Commissioner’s” in its place.
6. Removing paragraph (d)(5).
7. Revising paragraph (h)(1).
8. Adding the text “, or any successor
form,” before the text “must be executed”
in the first sentence of paragraph (h)(2),
removing the second sentence and revis-
ing the third sentence.
9. Adding the text “(or successor
forms)” after the text “Forms 1122” in the
fourth sentence of paragraph (h)(2).
10. Adding the text “(or any successor
form)” after the text “Form 1122” in the
last sentence of paragraph (h)(2).
The revisions read as follows:
§1.1502-75 Filing of consolidated
returns.
* * * * *
(c) * * *
(1) * * *
(i) * * * Any such application must be
made through a letter ruling request filed
not later than the 90th day before the due
date of the consolidated return for the tax-
able year (including extensions). * * *
* * * * *
(h) Method of filing returns and
forms—(1) Consolidated return made
by common parent or agent.

The con-
solidated return must be made on Form
1120, U.S. Corporation Income Tax
Return (or any successor form), for
the group by the common parent or
the agent for the group as provided in
§1.1502-77(c). The consolidated return,
with Form 851, Affiliations Schedule (or
any successor form), attached, must be
filed with the service center with which
the common parent would have filed a
separate return.

Bulletin No. 2023–34 597 August 21, 2023
(2) * * * The group must attach either
executed Forms 1122 (or successor forms)
or unsigned copies of the completed
Forms 1122 (or successor forms) to the
consolidated return. * * *
* * * * *
Par. 31. Section 1.1502-76 is amended
by:
1. Revising the last sentence of para-
graph (a).
2. Removing the last sentence from
paragraphs (b)(1)(ii)(A)(2) and (b)(2)(v).
3. Revising paragraph (b)(6).
4. Designating Example 1 and 2 in
paragraph (c)(3) as paragraphs (c)(3)(i)
and (ii), respectively.
5. In newly designated paragraph (c)(3)
(i), removing the text “June 15” wherever
it appears and adding the text “July 15”
in its place, and removing the text “March
15” wherever it appears and adding the
text “April 15” in its place.
6. In newly redesignated paragraph (c)
(3)(i), removing the text “1966” wherever
it appears and adding the text “2022” in
its place.
7. In newly redesignated paragraphs (c)
(3)(i), removing the text “1967” wherever
it appears and adding the text “2023” in
its place.
8. In newly redesignated paragraphs (c)
(3)(i), removing the text “1968” wherever
it appears and adding the text “2024” in
its place.
9. In newly redesignated paragraph (c)
(3)(ii), removing the text “June 15” wher-
ever it appears and adding the text “July
15” in its place, and removing the text
“March 15” wherever it appears and add-
ing the text “April 15” in its place.
10. In newly redesignated paragraph
(c)(3)(ii), removing the text “1967” wher-
ever it appears and adding the text “2023”
in its place.
11. In newly redesignated paragraph
(c)(3)(ii), removing the text “1968” wher-
ever it appears and adding the text “2024”
in its place.
12. Revising paragraph (d).
The revisions read as follows:
§1.1502-76 Taxable year of members of
group.
(a) * * * Any request for such consent
must be requested at the time and in the
manner that the Commissioner of Internal
Revenue may prescribe by Internal
Revenue Service forms and instructions
or by publication in the Internal Revenue
Bulletin (see §601.601(d)(2)(ii) of this
chapter).
(b) * * *
(6) Applicability date. Except as pro-
vided in paragraphs (b)(1)(ii)(A)(2) and
(b)(2)(v) of this section, this paragraph (b)
applies to corporations becoming or ceas-
ing to be members of consolidated groups
on or after January 1, 1995.
* * * * *
(d) Applicability date—(1) Taxable
years of members of group applicability
date.

Paragraph (a) of this section applies
to any original consolidated Federal
income tax return due (without exten-
sions) after July 20, 2007.
(2) Election to ratably allocate items
applicability date. Paragraph (b)(2)(ii)
(D) of this section applies to any original
consolidated Federal income tax return
due (without extensions) after July 20,
2007.
§1.1502-77 [Amended]
Par. 32. Section 1.1502-77 is amended
by:
1. Designating Examples 1 through
15 in paragraph (g) as paragraphs (g)(1)
through (15), respectively.
2. In paragraph (g), for each newly
redesignated paragraph listed in the
“Paragraph” column, removing the text
indicated in the “Remove” column and
adding in its place the text indicated in the
“Add” column:
ParagraphRemoveAdd
(g)(2)(i)Example 1
paragraph (g)(1)(i) of this section (Example 1)
(g)(4)(i)
Example 3paragraph (g)(3)(i) of this section (Example 3)
(g)(5)(i)
Example 4paragraph (g)(4) of this section (Example 4)
(g)(11)(i)(B)(1)
histhe Commissioner’s
(g)(11)(ii)(A)
paragraph (i)(A) of this Example 11
paragraph (g)(11)(i)(A) of this section
(g)(12)(i)
paragraph (ii)(A) of Example 11paragraph (g)(11)(ii)(A) of this section (Example
11)
(g)(13)(i)March 15April 15
§1.1502-77A [Amended]
Par. 33. Section 1.1502-77A is
amended by removing the text “he may, if
he deems it advisable,” from the last sen-
tence of paragraph (d) and adding the text
“the Commissioner may” in its place.
§1.1502-77B [Amended]
Par. 34. Section 1.1502-77B is
amended by:
1. Removing the text “he may, if he
deems it advisable,” from the last sentence
of paragraph (a)(6)(i) and adding the text
“the Commissioner may” in its place.
2. Removing the text “he” from para-
graph (a)(6)(ii) and adding the text “the
Commissioner” in its place.
Par. 35. Section 1.1502-78 is amended
by revising paragraph (f) to read as
follows:

August 21, 2023 598 Bulletin No. 2023–34
§1.1502-78 Tentative carryback
adjustments.
* * * * *
(f) Applicability date. This section
applies to taxable years to which a loss or
credit may be carried back and for which
the due date (without extensions) of the
original return is after June 28, 2002,
except that the provisions of paragraph (e)
(2) of this section apply for applications
by new members of consolidated groups
for tentative carryback adjustments result-
ing from net operating losses, net capital
losses, or unused business credits arising
in separate return years of new members
that begin on or after January 1, 2001.
Par. 36. Section 1.1502-79 is amended
by:
1. Revising paragraphs (a), (b), and (d).
2. Removing the text “(or §§ 1.1502-
79A(a)(1) and (2), as appropriate)” from
paragraph (e)(1).
3. Revising paragraph (e)(2).
The revisions read as follows:
§1.1502-79 Separate return years.
(a) Carryover and carryback of con-
solidated net operating losses to separate
return years. For rules regarding the car-
ryover and carryback of consolidated net
operating losses to separate return years,
see §1.1502-21(b).
(b) Carryover and carryback of con-
solidated net capital loss to separate
return years. For rules regarding the car-
ryover and carryback of consolidated net
capital losses to separate return years, see
§1.1502-22(b).
* * * * *
(d) Carryover and carryback of con-
solidated unused foreign tax—(1) In gen-
eral. If a consolidated unused foreign tax
can be carried under the principles of sec-
tion 904(c) and §1.1502-4(d) to a separate
return year of a corporation (or could
have been so carried if such corporation
were in existence) that was a member of
the group in the year in which the unused
foreign tax arose, then the portion of the
consolidated unused foreign tax attrib-
utable to the corporation (as determined
under paragraph (d)(2) of this section) is
apportioned to the corporation (and any
successor to that corporation in a trans-
action to which section 381(a) applies)
under the principles of §1.1502-21(b) and
is deemed paid or accrued in such sepa-
rate return year to the extent provided in
section 904(c).
(2) Portion of consolidated unused for-
eign tax attributable to a member. The
portion of a consolidated unused foreign
tax for any year attributable to a member
is an amount equal to the consolidated
unused foreign tax multiplied by a frac-
tion. The numerator of the fraction is the
foreign taxes paid or accrued by the mem-
ber for the year (including those taxes
deemed paid or accrued, other than by rea-
son of section 904(c)). The denominator
of the fraction is the aggregate of all such
taxes paid or accrued for the year (includ-
ing those taxes deemed paid or accrued,
other than by reason of section 904(c)) by
all members of the group.
(e) * * *
(2) Portion of consolidated excess
charitable contributions attributable to a
member. The portion of the consolidated
excess charitable contributions for any
year attributable to a member is an amount
equal to the consolidated excess contri-
butions multiplied by a fraction. The
numerator of the fraction is the charitable
contributions paid by the member for the
year. The denominator of the fraction is
the aggregate of all charitable contribu-
tions paid for the year by all members of
the group.
* * * * *
§1.1502-80 [Amended]
Par. 37. Section 1.1502-80 is amended
by removing the text “on or after
September 17, 2008” from paragraph (c)
(2).
§1.1502-81T [Removed]
Par. 38. Section 1.1502-81T is
removed.
Par. 39. Section 1.1502-90 is amended
by revising the entry in the table of con-
tents for §1.1502-99, in numerical order,
to read as follows:
§1.1502-90 Table of contents.
* * * * *
§1.1502-99 Effective/applicability
dates.
(a) In general.
(b) Reattribution of losses under
§1.1502-36(d)(6).
(c) Application to section 163(j).
(1) Sections 1.382-2 and 1.382-5.
(2) Sections 1.382-6 and 1.383-1.
§1.1502-91 [Amended]
Par. 40. Section 1.1502-91 is amended
by removing paragraph (b)(3).
§1.1502-92 [Amended]
Par. 41. Section 1.1502-92 is amended
by:
1. Designating Examples 1 through 3 in
paragraph (b)(3)(iii) as paragraphs (b)(3)
(iii)(A) through (C), respectively.
2. In newly redesignated paragraphs
(b)(3)(iii)(A) through (C), further redes-
ignating paragraphs in the first column as
paragraphs in the second column:
Old ParagraphsNew Paragraphs
(b)(3)(iii)(A)(i) and (ii)...........................
(b)(3)(iii)(A)(1) and (2)
(b)(3)(iii)(B)(i), (ii), (iii), and (iv)...............
(b)(3)(iii)(B)(1), (2), (3), and (4)
(b)(3)(iii)(C)(i) and (ii)...........................
(b)(3)(iii)(C)(1) and (2)
3. Removing the text “his” from newly
redesignated paragraph (b)(3)(iii)(B)(2)
and adding the text “its” in its place.
Par. 42. Section 1.1502-99 is amended
by:
1. Revising paragraphs (a) and (b).
2. Removing paragraph (c).
3. Redesignating paragraph (d) as para-
graph (c).

Bulletin No. 2023–34 599 August 21, 2023
The revisions read as follows:
§1.1502-99 Effective/applicability
dates.
(a) In general. Sections 1.1502-91
through 1.1502-96 and §1.1502-98 apply
to any testing date that is on or after June
25, 1999. Sections 1.1502-94 through
1.1502-96 also apply to a corporation that
becomes a member of a group or ceases to
be a member of a group (or loss subgroup)
on or after June 25, 1999.
(b) Reattribution of losses under
§1.1502-36(d)(6). Section 1.1502-96(d)
applies to reattributions of net operating
loss carryovers, capital loss carryovers,
and deferred deductions in connection
with a transfer of stock to which §1.1502-
36 applies, and the election under
§1.1502-96(d)(5) (relating to an election
to reattribute section 382 limitation) can
be made with an election under §1.1502-
36(d)(6) to reattribute a loss to the com-
mon parent that is filed at the time and in
the manner provided in §1.1502-36(e)(5)
(x).
* * * * *
Par. 43. Section 1.1502-100 is amended
by:
1. Removing the text Ҥ 1.1502-1
through § 1.1502-80” from paragraph (a)
(2) wherever it appears and adding the
text “the consolidated return regulations”
in its place.
2. Removing the text “1.1502-21A or”
and the text “(as appropriate)” from para-
graph (c)(2).
3. Revising paragraph (d).
The revision reads as follows:
§1.1502-100 Corporations exempt from
tax.
* * * * *
(d) Separate unrelated business taxable
income—(1) In general. The separate
unrelated business taxable income of a
member of an exempt group must be com-
puted in accordance with the provisions of
section 512 covering the determination of
unrelated business taxable income of sep-
arate corporations, except that:
(i) The provisions of paragraphs (a)
through (d), (f) through (k), and (o) of
§1.1502-12 apply; and
(ii) No charitable contributions deduc-
tion is taken into account under section
512(b)(10).
(2) Section 501(c)(2) organizations.

See sections 511(c) and 512(a)(3)(C) for
special rules applicable to organizations
described in section 501(c)(2).
§§1.1502-9A, 1.1502-15A, 1.1502-
21A, 1.1502-22A, 1.1502-23A,
1.1502-41A, 1.1502-79A, 1.1502-90A,
1.1502-91A, 1.1502-92A, 1.1502-93A,
1.1502-94A, 1.1502-95A, 1.1502-96A,
1.1502-97A, 1.1502-98A, 1.1502-99A,
and 1.1503-2 [Removed]
Par. 44. Sections 1.1502-9A,
1.1502-15A, 1.1502-21A, 1.1502-22A,
1.1502-23A, 1.1502-41A, 1.1502-79A,
1.1502-90A, 1.1502-91A, 1.1502-92A,
1.1502-93A, 1.1502-94A, 1.1502-95A,
1.1502-96A, 1.1502-97A, 1.1502-98A,
1.1502-99A, and 1.1503-2 are removed.
§1.1503-2 [Removed]
Par. 45. Section 1.1503-2 is removed.
§1.1503(d)-1 [Amended]
Par. 46. Section 1.1503(d)-1 is amended
by removing the text “possession of the
United States” from paragraph (b)(7) and
adding the text “U.S. territory (as defined
in §1.1502-1(l))” in its place.
Par. 47. Section 1.1503(d)-8 is
amended by:
1. Revising the last sentence of para-
graph (a).
2. Removing and reserving paragraphs
(b)(1), (b)(2), (b)(3)(ii), (b)(3)(iii), and (b)
(4).
The revision reads as follows:
§1.1503(d)-8 Effective dates.
(a) * * * Section 1.1503-2, as contained
in 26 CFR part 1, revised as of April 1,
2023, applies for dual consolidated losses
incurred in taxable years beginning on
or after October 1, 1992, and before the
application date.
* * * * *
Par. 48. Section 1.1552-1 is amended
by:
1. Redesignating paragraphs (a)(1)(ii)
(a) through (d) as paragraphs (a)(1)(ii)(A)
through (D), respectively.
2. Revising newly redesignated para-
graph (a)(1)(ii)(B).
3. Redesignating paragraphs (a)(2)(ii)
(a) through (i) as paragraphs (a)(2)(ii)(A)
through (I), respectively.
4. Removing and reserving newly
redesignated paragraph (a)(2)(ii)(B).
5. Revising paragraph (a)(2)(ii)(I).
The revisions read as follows:
§1.1552-1 Earnings and Profits.
(a) * * *
(1) * * *
(ii) * * *
(B) Such member’s capital gain net
income (determined without regard to any
net capital loss carryover attributable to
such member);
* * * * *
(2) * * *
(ii) * * *
(I) For purposes of subtitle A of the
Code, if two or more taxable income
brackets are set forth in section 11(b)
of the Code, the amount in each taxable
income bracket is divided by the num-
ber of members (or such portion of each
bracket which is apportioned to the mem-
ber pursuant to a schedule attached to the
consolidated return for the consolidated
return year). However, if for the taxable
year some or all of the members are com-
ponent members of a controlled group
of corporations (within the meaning of
section 1563) and if there are other such
component members which do not join
in filing the consolidated return for such
year, the amount to be divided among the
members filing the consolidated return is
(in lieu of the taxable income brackets)
the sum of the amounts apportioned to the
component members which join in filing
the consolidated return.
* * * * *
§1.1563-1 [Amended]
Par. 49. Section 1.1563-1 is amended
by:
1. Removing the text “(directly and
with the application of § 1.1563-3(b)(1),
relating to options)” from paragraph (a)
(2) wherever it appears and adding the
text “(directly and with the application of
§ 1.1563-3(b)(1), (2), and (3))” in its place.

August 21, 2023 600 Bulletin No. 2023–34
2. Removing the text “his” from para-
graph (a)(6) wherever it appears and
adding the text “the shareholder’s” in its
place.
3. In paragraph (b)(4), designating
Examples 1 through 4 as paragraphs (b)
(4)(i) through (iv), respectively.
4. Removing the text “he” from the
third sentence of newly designated para-
graph (b)(4)(i) and adding the text “B” in
its place.
§1.1563-2 [Amended]
Par. 50. Section 1.1563-2 is amended
by:
1. Removing the text “his” from each
of paragraphs (b)(2)(iii) and (b)(4)(ii),
and adding the text “the employee’s” in
its place.
2. In paragraph (b)(7), designating
Examples 1 through 3 as paragraphs (b)
(7)(i) through (iii), respectively.
3. In newly designated paragraph (b)
(7)(iii), removing the text “he” wherever it
appears and adding the text “Davis” in its
place; removing the text “his” wherever
it appears and adding the text “Davis’s”
in its place; and removing the text “wife”
from the last sentence and adding the text
“spouse” in its place.
§ 1.1563-3 [Amended]
Par. 51. Section 1.1563-3 is amended
by:
1. Removing the text “his” from para-
graph (b)(2)(i) and adding the text “the
partner’s” in its place.
2. Removing the text “The provisions
of this subparagraph may be illustrated by
the following example:” from paragraph
(b)(2)(ii).
3. Removing the text “his” from the
fourth sentence of paragraph (b)(2)(ii) and
adding the text “Green’s” in its place.
4. In the sixth sentence of paragraph (b)
(2)(ii), removing the text “he” and adding
the text “Jones” in its place, and removing
the text “his” and adding the text “Jones’s”
in its place.
5. Removing the text “he” from the last
sentence of paragraph (b)(2)(ii) and add-
ing the text “White” in its place.
6. In paragraph (b)(3)(i), removing
the text “his” from the second sentence
and adding the text “the beneficiary’s” in
its place, and removing the text “he” and
“him” from the second-to-last sentence
and adding the text “that beneficiary” in
its place.
7. In paragraph (b)(3)(ii), removing the
text “his” and adding the text “the dece-
dent’s” in its place, and removing the text
“he” and “him” wherever it appears and
adding the text “the person” in its place.
8. Removing the text “The provisions
of this subparagraph may be illustrated by
the following example:” from paragraph
(b)(4)(ii).
9. In paragraph (b)(4)(ii), removing
the text “he” from the fifth sentence and
adding the text “Smith” in its place, and
removing the text “Smith’s wife” and “his
wife” from the last sentence wherever
it appears and adding the text “Smith’s
spouse” in its place.
10. Removing the text “his” from para-
graphs (b)(5)(i) and (ii) and (b)(6)(i) and
(ii) wherever it appears and adding the
text “the individual’s” in its place.
11. Removing the text “The provisions
of this subparagraph may be illustrated by
the following example:” from paragraph
(b)(6)(iv).
12. Redesignating paragraphs (b)(6)
(iv)(a) through (d) as paragraphs (b)(6)
(iv)(A) through (D).
13. In newly redesignated paragraph
(b)(6)(iv)(A), removing the text “F”
and adding the text “B” in its place, and
removing the text “His son” and “his son”
and adding the text “B’s child” in its place.
14. In newly redesignated paragraph
(b)(6)(iv)(B), removing the text “F”
wherever it appears and adding the text
“B” in its place, removing the text “sub-
division (ii) of this subparagraph” and
adding the text “paragraph (b)(6)(ii) of
this section” in its place, removing the
text “he” and adding the text “B” in its
place, and removing the text “his adult
son” and adding the text “B’s adult child”
in its place.
15. In the first sentence of newly redes-
ignated paragraph (b)(6)(iv)(C), removing
the text “son” and adding the text “child”
in its place, and removing the text “by his
father, F” and adding the text “by B” in
its place.
16. In the second sentence of newly
redesignated paragraph (b)(6)(iv)(C),
removing the text “his brother” and add-
ing the text “M’s sibling” in its place,
removing the text “F” wherever it appears
and adding the text “B” in its place,
removing the text “him” and adding the
text “B” in its place, and removing the
text “his” and adding the text “B’s” in its
place.
17. In newly redesignated paragraph
(b)(6)(iv)(D), removing the text “son” and
adding the text “child” in its place, remov-
ing the text “he” wherever it appears
and adding the text “A” in its place, and
removing the text “his father” and adding
the text “B” in its place.
18. Removing the text “him” from
paragraph (c)(2) and adding the text “the
individual” in its place.
19. In paragraph (c)(4), designating
Examples 1 through 3 as paragraphs (c)(4)
(i) through (iii), respectively.
20. In newly designated paragraph (c)
(4)(ii), removing the text “brother” from
the second sentence and adding the text
“sibling” in its place, and removing the
text “father” from the third sentence and
adding the text “parent” in its place.
21. Removing the text “his son,” from
the first sentence of newly designated
paragraph (c)(4)(iii).
22. In paragraph (d)(3), designating
Examples 1 through 3 as paragraphs (d)
(3)(i) through (iii), respectively.
23. In newly designated paragraph (d)
(3)(i), removing the text “he” from the
third sentence and adding the text “Smith”
in its place, and removing the text “his
stock in corporation Z” from the fifth sen-
tence and adding the text “the corporation
Z stock” in its place.
24. In newly designated paragraph (d)
(3)(ii), removing the text “H” wherever
it appears and adding the text “A” in its
place, and removing the text “W” wher-
ever it appears and adding the text “B” in
its place.
25. Removing the text “wife” from
the first sentence of newly designated
paragraph (d)(3)(ii) and adding the text
“spouse” in its place.
26. Removing the text “subpara-
graph (2)(iii) of this paragraph” from
the fifth sentence of newly designated
paragraph (d)(3)(ii) and adding the text
“paragraph (d)(2)(iii) of this section”
in its place.

Bulletin No. 2023–34 601 August 21, 2023
PART 5—TEMPORARY INCOME
TAX REGULATIONS UNDER THE
REVENUE ACT OF 1978
Par. 52. The authority citation for part 5
continues to read as follows:
Authority: 26 U.S.C. 7805.
§5.1502-45 [Removed]
Par. 53. Section 5.1502-45 is removed.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 54. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805. * * *
§301.6402-7 [Amended]
Par. 55. Section 301.6402-7 is amended
by removing the text “§§ 1.1502-21(b)
or 1.1502-21A(b) (as appropriate)” from
paragraph (g)(2)(iii) and adding the text
“§1.1502-21(b)” in its place.
PART 602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT
Par. 56. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
§602.101 [Amended]
Par. 57. Section 602.101(b) is amended
by removing the entries for §§1.1502-
9A, 1.1502-18, 1.1502-76T, 1.1502-95A,
1.1503-2, and 1.1503-2A from the table.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register July 4,
2023, 8:45 a.m., and published in the issue of the
Federal Register for July 7, 2023, 88 FR 52057)

Bulletin No. 2023–34 i August 21, 2023
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

August 21, 2023 ii Bulletin No. 2023–34
Numerical Finding List
1
Bulletin 2023–34
Announcements:
2023-18, 2023-30 I.R.B. 366
2023-19, 2023-30 I.R.B. 367
2023-20, 2023-30 I.R.B. 368
2023-17, 2023-31 I.R.B. 412
2023-21, 2023-31 I.R.B. 413
2023-22, 2023-32 I.R.B. 429
2023-23, 2023-34 I.R.B. 569
Notices:
2023-29, 2023-29 I.R.B. 1
2023-45, 2023-29 I.R.B. 317
2023-47, 2023-29 I.R.B. 318
2023-37, 2023-30 I.R.B. 359
2023-50, 2023-30 I.R.B. 361
2023-51, 2023-30 I.R.B. 362
2023-54, 2023-31 I.R.B. 382
2023-53, 2023-32 I.R.B. 424
2023-55, 2023-32 I.R.B. 427
2023-57, 2023-34 I.R.B. 560
2023-58, 2023-34 I.R.B. 563
2023-59, 2023-34 I.R.B. 564
Proposed Regulations:
REG-124123-22, 2023-30 I.R.B. 369
REG-124930-21, 2023-31 I.R.B. 431
REG-120730-21, 2023-33 I.R.B. 491
REG-134420-10, 2023-34 I.R.B. 571
Revenue Procedures:
2023-31, 2023-25 I.R.B. 386
2023-26, 2023-33I.R.B. 486
Revenue Rulings:
2023-13, 2023-32 I.R.B. 413
2023-14, 2023-33 I.R.B. 484
2023-15, 2023-34 I.R.B. 559
Treasury Decisions:
9976, 2023-30 I.R.B. 354
9977, 2023-31 I.R.B. 375
9978, 2023-32 I.R.B. 415
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

Bulletin No. 2023–34 iii August 21, 2023
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2023–34
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

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