• "SRLY? You Can’t Be Serious.” “I Am Serious...and Don’t Call Me SRLY.” The IRS Issues Helpful Guidance on the Application of the SRLY Register Rules to Dual Consolidated Losses
  • August 16, 2011 | Authors: Michael R. Miles; William R. Pauls
  • Law Firm: Sutherland Asbill & Brennan LLP - Washington Office
  • On August 5, 2011, the Internal Revenue Service (the IRS) issued a generic legal advice - AM 2011-002 (the Chief Counsel Memo) - explaining how the separate return limitation year (SRLY) rules apply to the computation of consolidated taxable income for an affiliated group with a dual consolidated loss (a DCL) that is attributable to a separate unit. In the Chief Counsel Memo, the IRS concluded that a current year DCL of the separate unit should be taken into account for purposes of calculating the consolidated taxable income of the affiliated group for that taxable year to the extent that income was attributable to the separate unit in a prior taxable year of the affiliated group. Stated differently, the IRS allowed the affiliated group to use the separate unit’s current year DCL to the extent of the separate unit’s positive “SRLY register” (which also is referred to as the “cumulative register”). Significantly, the Chief Counsel Memo constitutes the first piece of written guidance issued by the IRS on this issue.