Non-Applicability of Section 357(c) to Consolidated Groups

Document Headings Document headings vary by document type but may contain the following: the agency or agencies that issued and signed a document the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to the agency docket number / agency internal file number the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions See the Document Drafting Handbook for more details. Department of the Treasury Internal Revenue Service 26 CFR Part 1 [TD 10059] RIN 1545-BJ87 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains final regulations clarifying that, in the case of certain transfers between members of a consolidated group, a transferee's assumption of certain liabilities will not reduce the transferor's basis in the transferee's stock received in the transfer. These final regulations affect consolidated groups and their members. DATES: Effective date: These final regulations are effective on October 16, 2026. Applicability date: For the date of applicability, see § 1.1502-80(d)(4). FOR FURTHER INFORMATION CONTACT: William W. Burhop at (202) 317-5363 (not a toll-free number). SUPPLEMENTARY INFORMATION: Authority The final regulations contained in this Treasury decision are issued under the authority of section 1502 of the Internal Revenue Code (Code), which authorizes the Secretary of the Treasury or the Secretary's delegate (Secretary) to prescribe regulations for an affiliated group of corporations that join in filing (or that are required to join in filing) a consolidated return (consolidated group) to clearly reflect, and to prevent the avoidance of, the Federal income tax liability of the consolidated group. For purposes of carrying out those objectives, section 1502 authorizes the Secretary to prescribe rules that may be different from the provisions of chapter 1 of the Code…