IRS issues AM 2011-002 addressing interaction of dual consolidated losses and SRLY rules

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In a generic legal advice memorandum (AM 2011-002) issued on August 1, 2011, the IRS Office of Chief Counsel concludes that where a hybrid entity separate unit incurs a DCL in a tax year in which it has a positive SRLY Cumulative Register (and the consolidated group has positive income), the DCL incurred by the separate unit may be used on a current basis without entering into a domestic use election.

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