Rules Keep Limits on Losses for Transactions Within Controlled Groups

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Taxpayers will continue to be limited in the tax losses they can take on stock transferred at a loss from one member of a controlled group to another under final rules unveiled by IRS. The rules (T.D. 9583) maintain the position taken under proposed regulations (REG-118761-09) that taxpayers cannot take all of the losses associated with these transfers under a “continuing deferral” model. One practitioner says this outcome was disappointing in a difficult economic climate.

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