Dividends Under the Gross Reciepts Test Include Dividends From Lower-Tier Operating Subsidiary

¶2350-Losses §165

For purposes of the § 165(g)(3)(B) gross receipts test, dividends include dividends from a lower-tier subsidiary attributable to income derived from the conduct of an active trade or business by the lower-tier subsidiary, the National Office advised.

The taxpayer (T) is a domestic corporation that joins its parent in the filing of a consolidated return. T wholly owned Holding, a Country C corporation through which T conducted business in Country C. Holding was a holding company at the top of a group of Country C corporations (collectively referred to as the C Group) , which consisted of Sub One, an operating company engaged in an active trade or business, Sub Two, a holding company...