Final DCL rules reflect TEI views.

• Position: Dual consolidated losses

Final regulations issued by the government on in March relating to dual consolidated losses reflect recommendations made by Tax Executives Institute in its August 2005 written comments.

The final DCL regulations reduce the period for certifying DCLs from seven to five years, consistent with the treatment of gain recognition agreements under section 367. The reduced certification period will apply to DCLs subject to the current regulations (which have a 15-year certification rule).

TEI President David L. Bernard praised the government for shortening the certification period and permitting taxpayers to use it for pre-effective date DCLs. "Five years is sufficient to guard against the abuse these rules were intended to address," he said. "In addition, it makes no sense to require taxpayers to continue to track DCLs over a 15-year period, when new losses benefit from a significantly...