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contractor who for any reason has ceased to en whose members has a fiscal year not conforming
do not properly reflect excessive profits for the
separately the renegotiable and nonrenegotiable 1464.5 Partial fiscal years. If during a business of each member of the group in the related group's fiscal year under review a per detail specified in the Standard Form of Conson came under control of, acquired control over tractor's Report. See 1470.3(h) of this subor came under common control with another chapter. A request by either group shall conmember or members of such group, such person
stitute a consent by each member of such group may, in the discretion of the Board, be included
to the application of the regulations governing in the consolidated proceeding with respect to
consolidated renegotiation. The request shall be his receipts or accruals from the date such con duly executed by each eligible member of the trol became effective, if such person otherwise
affiliated group or by each member of the remeets the qualifications for consolidated renego lated group. The request shall be filed with the tiation set forth in 8 1464.4. Similarly, if dur
Board on or before the first date on which any ing a related group's fiscal year under review
member of the group completes the filing of such control ceases with respect to a person who
the Standard Form of Contractor's Report. The is a member of such group, such person may, in Board may grant requests filed after that date the discretion of the Board, be included in the if no inconvenience to the Board will result. consolidated proceeding with respect to his re (b) A request filed by the members of an ceipts or accruals up to the date such control
affiliated group shall designate the common ceased, if such person otherwise meets the quali parent corporation as agent of the group and fications for consolidated renegotiation set forth
shall authorize such parent corporation to repin 8 1464.4.
resent all members of the group in all respects 1464.6 Effect of consolidation. Once the
in connection with the consolidated proceeding. Board has granted a request for renegotiation
A request filed by the members of a related of an affiliated group or related group on a group shall designate one member of the group consolidated basis, then, except as otherwise as agent of the group and shall authorize such provided herein, the proceeding will remain member to represent all members of the group consolidated for all purposes, regardless of in all respects in connection with the consoliwhether a clearance issues or excessive profits dated proceeding. Such authorization in either are determined by agreement or order. How
case shall be irrevocable as long as renegotiation ever, on request of any member of the group or
is conducted on a consolidated basis, and shall on its own motion, the Board may discontinue apply to all phases of the proceeding including the consolidated proceeding and convert it to
commencement of renegotiation, submission of separate renegotiation proceedings or consoli data, the making and execution of renegotiation date a different group, if satisfied that the con agreements, administrative review, and petition solidation was improperly effected pursuant to
to the Tax Court. the regulations in this subchapter or, if satisfied (c) The Board will commence renegotiation in the case of a related group, one or more of
with an affiliated group on a consolidated basis
by sending a registered letter to the common ated group or a related group are renegotiated
separately the amounts received or accrued by
such person which are included in the consolimember of such group designated as agent pur dated proceeding. Such person will be renegotisuant to paragraph (b) of this section, and such
ated separately with respect to the receipts or letter will constitute the granting by the Board
accruals reflected on şuch Standard Form of
Contractor's Report which are not included in
the consolidated proceeding: Provided, how-
ever, That such separate renegotiation will be Excessive profits, whether determined by agree
conducted concurrently with the consolidated ment or order, will be allocated among the
proceeding, if practicable. members of the consolidated group and when
1464.12 Renegotiation losses of consolinecessary among different fiscal years of any
dated contractors.-(a) Scope and effect of member in an equitable manner, and the agree
section. This section explains how a renegotiament or order will disclose the allocation. The tion loss sustained by a contractor in a fiscal excessive profits will be so allocated even though year prior to the fiscal year under review will some or all of the members of the consolidated be treated pursuant to section 103(m) of the group participate in filing a consolidated Fed act when such contractor (1) was a member eral tax return. If excessive profits have been of a consolidated group in the loss year, or (2) realized and if the renegotiation agreement or is a member of a consolidated group in the order were to impose liability generally on the fiscal year under review. For regulations perentire consolidated group for the profits found taining to the carryforward of a renegotiation to be excessive, without fixing the separate allo loss sustained by a single contractor, see § 1457.9 cations, the members of the group might not of this subchapter. be allowed appropriate deductions for Federal (b) Definitions. As used in this section : income and excess profits tax purposes under (1) The term "consolidated renegotiation section 1481 of the Internal Revenue Code. loss" means the amount by which the aggregate
1464.9 Liability of members of affiliated costs paid or incurred by the members of a conor related groups. Although excessive prof solidated group with respect to renegotiable its to be eliminated will be allocated to mem receipts or accruals in a fiscal year exceed the bers of an affiliated or related group, each aggregate renegotiable receipts or accruals of member of the affiliated or related group shall such group in such fiscal year. be jointly and severally liable for the total (2) The term “loss member" means a contracamount of excessive profits, if any, to be tor which sustains a renegotiation loss for a eliminated as determined in the consolidated fiscal year in which it is a member of a group proceeding
that sustains a consolidated renegotiation loss. 1464.10 When consolidated basis not (c) Carry forward for lo88 member of a conused. Whenever the members of an affili solidated group. If a contractor who was the
sole loss member of a consolidated group in a
$ 1457.9 of this subchapter. Such 106300 -
consolidation in the loss year, and the aggregate
and costs of such predecessor will be included
in the computation. The following examples
illustrate how the limitation in this subpara-
graph is computed and applied:
(1) Members were all separate in loss year.$200,000; and C sustained a renegotiation loss of
(i) In Year 1, A, B, and C would have qualified $100,000. The consolidated renegotiation loss of the
for consolidated renegotiation, but were not group was $60,000. If the members are renegotiated consolidated. A realized renegotiable profits of separately in Year 2, $40,000 will be allowed as a $240,000; B sustained a renegotiation loss of cost to B and $20,000 to O.
$200,000; and C sustained a renegotiation loss No amount of a consolidated renegotiation loss of $100,000. If A, B, and C were renegotiated will be allowed as a carryforward (1) if such separately in Year 2, $200,000 would be allowed loss resulted from gross inefficiency; and (2)
as a cost to B and $100,000 to C. However, A, unless it is shown that any loss member of such
B, and C are a consolidated group in Year 2, group has reasonably pursued available reme
with renegotiable profits of $40,000. Had they dies for obtaining relief from such loss.
been consolidated in Year 1, the consolidated (d) Carryforward to consolidated group.
renegotiation loss of the group would have been (1) When group was identical in lo88 year.
only $60,000. It is this amount of $60,000, and If a group consolidated in the fiscal year under not the aggregate of $300,000 of renegotiation review sustained a consolidated renegotiation
losses sustained by B and C, which is allowed loss in a prior fiscal year, the amount of such as a cost to the consolidated group in Year 2. loss shall be a renegotiation loss carryforward The $20,000 of loss remaining after such allow
ance is carried forward to Year 3 and is allowed for the group to each of the 5 fiscal years following the loss year, and shall be carried for as a cost to the consolidated group in that year. ward in the manner provided in this section (ii) Members were in different groups in and § 1457.9 of this subchapter.
lo88 year.-In Year 1, A, B, and C were mem(2) When members were separate or in dif
bers of a consolidated group; D and E were ferent groups in lo88 year. If the members of members of another consolidated group; and a group consolidated in the fiscal year under all five would have qualified for consolidation review did not constitute a consolidated group as a single group. Their renegotiable profits of identical membership in a prior fiscal year and losses were as follows: A, profit $240,000; in which one or more of such contractors sus B, loss $200,000; C, loss $100,000; D, profit tained renegotiation losses, such losses shall be $100,000; and E, loss $150,000. The consolidated carried forward as provided in this section and renegotiation loss of A, B, and C was $60,000,
allocable $40,000 to B and $20,000 to C. The
gotiation on consolidated basis (affiliated
The following letter is prescribed
THE RENEGOTIATION BOARD,
Washington 25, D.O.
1. Pursuant to the provisions of section 105(a) of
the Renegotiation Act of 1951 and Part 1464 of the (iii) Some members were separate and others
Renegotiation Board Regulations, the undersigned were in different group in lose year.-(a) In corporations hereby request renegotiation on a conYear 1, A (loss $500,000), B (profit $100,000), solidated basis for the fiscal year ended and C (profit $300,000) were members of a 2. The undersigned represent that they constitute consolidated group. The consolidated renegotia
all the members of an "affiliated group" as that term
is defined in section 1504 (a) of the Internal Revenue tion loss of A, B, and C was $100,000, allocable
Code, except those listed as follows: entirely to A, D (profit $200,000) was renego
Fiscal period tiated separately for the same year and made a Name of corporation
Ended renegotiation refund in the amount of $30,000, retaining $170,000 after renegotiation. E, a partnership (profit $40,000) was also renegotiated separately. In Year 2 the partners dissolved E and formed a corporation F, which continued the partnership business. Assume A, The corporation or corporations listed above bave not
joined in this request because each such corporation B, C, D and E would have qualified for con
(a) was not a member of such affiliated group during solidation in Year 1.
the entire fiscal year of the common parent corpora(6) In a Year 2 consolidated group com tion, or its fiscal year for Federal income tax purposed of A, B, C, and D, no amount of loss poses did not end on the same date as the fiscal year
of the common parent corporation, and (b) does not carryforward would be allowed to the group
qualify for consolidated renegotiation with the underbecause A, B, C, and D as a group in Year 1 signed within the exceptions provided in § 1461.2(b) would have realized a group profit of $70,000. of said regulations as set forth in Schedule A atIn making this computation, D's profits are
tached hereto; or because it bad no renegotiable busi
ness during the year under review. reduced by its $30,000 renegotiation refund.
3. Each of the undersigned hereby consents, for (c) In a Year 2 consolidated group com said fiscal year, to the Renegotiation Board Regulaposed of A, B, and D, the full amount of the tions with respect to (a) the determination and elimi. $100,000 consolidated renegotiation loss al
nation of excessive profits of tbe undersigned affili. locable to A would be allowed to the group.
ated group and (b) the determination of the amoumt
of the excessive profits of the undersigned affiliated (d) In a Year 2 consolidated group com group allocable, for the purposes of section 1481 of posed of A, B, C, and F, their consolidated the Internal Revenue Code, to each of the undersigned.
4. renegotiation loss as a group in Year 1 would
(the common parent corpora
tion of the undersigned affiliated group) is hereby have been $60,000; hence that amount would
designated as agent of the undersigned affiliated group be allowed as a loss carry forward to the group. and is hereby authorized to represent all
(e) Carryforward upon acquisition of busi bers of the group in all respects in connection with ness. The provisions of $ 1457.9(e) of this the consolidated renegotiation proceedings requested
herein for said fiscal year. subchapter shall apply to the carryforward of losses under this section.
5. The undersigned represent that they (have) (have
not) (delete inapplicable language) filed consolidated (f) Withdrawal from consolidated renego Federal income tax returns for said fiscal year; and tiation. Removed to Appendix.
that, except as indicated in Schedule A attached
"ene. ated ibed
hereto, each of the undersigned was a member of the same date as the fiscal year of the Olut.
Name of corporation
7. The undersigned are aware that under section
date as the fiscal year of the other members but ended
on an earlier date because it was dissolved during such any material respect.
fiscal year, and such member during its entire last 8. The person signing this request on behalf of each
fiscal period was a member of such affiliated group
(if none, write “None"):
Name of corporation