Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 66-91

1966-1 C.B. 54

Sec. 172

Sec. 1502

Full Text

Rev. Rul. 66-91

S corporation was a wholly-owned subsidiary of P corporation until December 31, 1961. In 1961 S corporation had taxable income which was included in a consolidated return filed for the calendar year by P corporation. This return showed a consolidated net operating loss. On January 1, 1962, S corporation servered its affiliation with P corporation and for the calendar years 1962 and 1963 S corporation filed separate income tax returns showing taxable income. For the calendar year 1964, S corporation sustained a net operating loss which was reflected on the separate tax return which it filed for that year. No adjustments were required under section 172(d) of the Internal Revenue Code of 1954. Held , that in determining the net operating loss deduction for the years 1962 and 1963, no portion of the net operating loss sustained by S corporation in 1964 is required to be carried back to 1961 since there was no consolidated taxable income for 1961.