I.R.C. § 1552(a) General Rule
Pursuant to regulations prescribed by the Secretary the earnings and profits of
each member of an affiliated group required to be included in a consolidated return
for such group filed for a taxable year shall be determined by allocating the tax
liability of the group for such year among the members of the group in accord with
whichever of the following methods the group shall elect in its first consolidated
return filed for such a taxable year:
I.R.C. § 1552(a)(1)
The tax liability shall be apportioned among the members of the group in accordance
with the ratio which that portion of the consolidated taxable income attributable
to each member of the group having taxable income bears to the consolidated taxable
I.R.C. § 1552(a)(2)
The tax liability of the group shall be allocated to the several members of the group
on the basis of the percentage of the total tax which the tax of such member if computed
on a separate return would bear to the total amount of the taxes for all members
of the group so computed.
I.R.C. § 1552(a)(3)
The tax liability of the group (excluding the tax increases arising from the consolidation)
shall be allocated on the basis of the contribution of each member of the group to
the consolidated taxable income of the group. Any tax increases arising from the
consolidation shall be distributed to the several members in direct proportion to
the reduction in tax liability resulting to such members from the filing of the consolidated
return as measured by the difference between their tax liabilities determined on
a separate return basis and their tax liabilities based on their contributions to
the consolidated taxable income.
I.R.C. § 1552(a)(4)
The tax liability of the group shall be allocated in accord with any other method
selected by the group with the approval of the Secretary.
I.R.C. § 1552(b) Failure To Elect
If no election is made in such first return, the tax liability shall be allocated
among the several members of the group pursuant to the method prescribed in subsection
(Aug. 16, 1954, ch. 736, 68A Stat. 371; Feb. 26, 1964,
Pub. L. 88-272, title II, 234(b)(8), 78 Stat. 116; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(159), 1906(b)(13)(A), 90 Stat. 1790, 1834.)
1976--Subsec. (a). Pub. L. 94-455, 1901(a)(159), 1906(b)(13)(A), struck out “beginning after December 31, 1953, and
ending after the date of enactment of this title” after “group filed for a taxable
year”, and “or his delegate” after “Secretary” in two places.
1964--Subsec. (a)(3). Pub. L. 88-272 struck out “(determined without regard to the 2 percent increase provided by section
“based on their contributions”.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(159) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section
1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 234(c)
of Pub. L. 88-272, set out as a note under section 1503 of this title.