Aggregation of stock.

• Author: Laffie, Lesli S.
• Position: By members of a consolidated group - IRS rules

Final regulations (TD 8949) address aggregation of stock ownership for members of a consolidated group. Regs. Sec. 1.1502-34 generally provides that, for consolidated return purposes, the stock ownership of all members of a consolidated group in another corporation is aggregated in determining the application of certain Code provisions. That regulation has now been amended to conform to a technical correction enacted in Section 311(c) of the Community Renewal Tax Relief Act of 2000 (2000 Act); a regulation under Sec. 732 has also been added to reflect that technical correction.

The regulations implement the statutory clarification that the special aggregate stock ownership rules apply for purposes of Sec. 732(f), which covers basis adjustments to assets of a controlled corporation received in a partnership distribution.

Sec. 732(f) was enacted by Section 538 of the Ticket to Work and Work Incentives Improvement Act of 1999 (1999 Act). The statute generally provides that, if (1) a corporate partner of a partnership receives a distribution from that partnership of stock in another corporation, (2) the corporate partner has control of the distributed corporation immediately after the distribution or at any time thereafter and (3) the partnership's adjusted basis in the stock immediately before the distribution exceeded the corporate partner's adjusted basis in the stock...