Sec. 1.1502-12 Separate taxable income.
The separate taxable income of a member (including a case in which deductions exceed gross income) is computed in accordance with the provisions of the Code covering the determination of taxable income of separate corporations, subject to the following modifications:
(a) Transactions between members and transactions with respect to stock, bonds, or other obligations of members shall be reflected according to the provisions of section 1.1502-13;
(b) Any deduction which is disallowed under section 1.1502-15A or 1.1502-15 shall be taken into account as provided in those sections;
(c) The limitation on deductions provided in section 615(c) or section 617(h) shall be taken into account as provided in section 1.1502-16;
(d) The method of accounting under which such computation is made and the adjustments to be made because of any change in method of accounting shall be determined under section 1.1502-17;
(e) Inventory adjustments shall be made as provided in section 1.1502-18;
(f) Any amount included in income under section 1.1502-19 shall be taken into account;
(g) In the computation of the deduction under section 167, property shall 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:
(1) The transfer occurs on or before January 4, 1973, or
(2) The transfer occurs after January 4, 1973, and the transfer is an intercompany transaction as defined in section 1.1502-13 or the basis of the property in the hands of the transferee is determined (in whole or in part) by reference to its basis in the hands of the transferor;
(h) No net operating loss deduction shall be taken into account;
(i) [Reserved]
(j) No capital gains or losses shall be taken into account;
(k) No gains and losses subject to section 1231 shall be taken into account;
(l) No deduction under section 170 with respect to charitable contributions shall be taken into account;
(m) No deduction under section 922 (relating to the deduction for Western Hemisphere trade corporations) shall be taken into account;
(n) No deductions under section 243(a)(1), 244(a), 245, or 247 (relating to deductions with respect to dividends received and dividends paid) shall be taken into account;
(o) Basis shall be determined under sections 1.1502-31 and 1.1502-32, and earnings and profits shall be determined under section 1.1502-33; and
(p) The limitation on deductions provided in section 613A shall be taken into account for each member's oil and gas properties as provided in section 1.1502-44.
(q) A thrift institution's deduction under section 593(b)(2) (relating to the addition to the reserve for bad debts of a thrift institution under the percentage of taxable income method) shall be determined under section 1.1502-42.
(r) See §§1.337(d)-2, 1.1502-35(f), and 1.1502-36 for rules relating to basis adjustments and allowance of stock loss on dispositions or transfers of subsidiary stock.
(s) See §1.1502-51 for rules relating to the computation of a member’s GILTI inclusion amount under section 951A and related basis adjustments.
(t) See §1.1502-50 for rules relating to the computation of a member's deduction under section 250.
(Secs. 1502 and 7805 of the Internal Revenue Code of 1954 (68A Stat. 637; 917; 26 U.S.C. 1502, 7805))
[T.D. 6894, 31 FR 11794, Sept. 8, 1966, as amended by T.D. 7192, 37 FR 12949, June 30, 1972; T.D. 7246, 38 FR 760, Jan. 4, 1973; T.D. 7725, 45 FR 65561, Oct. 3, 1980; T.D. 7876, 48 FR 11258, Mar. 17, 1983; T.D. 8294, 55 FR 9434, Mar. 14, 1990; T.D. 8319, 55 FR 49038, Nov. 26, 1990; T.D. 8364, 56 FR 47392, Sept. 19, 1991; T.D. 8597, 60 FR 36671-36710, July 18, 1995; T.D. 8677, 61 FR 33321-33335, June 27, 1996; T.D. 8823, 64 FR 36091-36116, July 2, 1999; T.D. 9048, 68 FR 12287-12300, Mar. 14, 2003; T.D. 9187, 70 FR 10319-10327, Mar. 3, 2005; T.D. 9254, 71 FR 13008-13018, Mar. 14, 2006; T.D. 9424, 73 FR 53934-53987, Sept. 17, 2008; T.D. 9866, 84 FR 29288-29370, June 21, 2019; T.D. 9901, 85 FR 43042-43117, July 15, 2020.]
