26 CFR 1.1502-26 - Consolidated dividends received deduction.
(ii) 85 percent of the consolidated taxable income computed without regard to the consolidated net operating loss deduction, consolidated section 247 deduction, the consolidated dividends received deduction, and any consolidated net capital loss carryback to the taxable year.
(2) If any member computes a deduction under section 593(b)(2) for a taxable year beginning after July 11, 1969, and ending before August 30, 1975, the deduction otherwise computed under this section shall be reduced by an amount determined by multiplying the deduction (determined without regard to this sentence and without regard to dividends received by the common parent if such parent does not use the percentage of income method provided by section 593(b)(2)) by the applicable percentage of the member with the highest applicable percentage (determined under subparagraphs (A) and (B) of section 593(b)(2)).
(3) For taxable years ending on or after August 30, 1975, the deduction otherwise computed under this section shall be reduced by the sum of the amounts determined under paragraph (a)(4) of this section for each member that is a thrift institution that computes a deduction under section 593(b)(2).
(4) For each thrift institution, the amount determined under this subparagraph is the product of:
(i) The portion of the deduction determined with regard to the sum of the dividends received by: (A) The thrift institution, and (B) any member in which that thrift institution owns, directly and with the application of paragraph (a)(5) of this section, 5 percent or more of the stock on any day during the consolidated return year, and
(5) For purposes of paragraph (a)(4)(i) of this section, a member owning stock of another member (the “second member”) shall be considered as owning its proportionate share of any stock of a member owned by the second member. Stock considered as being owned by reason of the preceding sentence shall, for purposes of applying that sentence, be treated as actually owned. The proportionate share of stock in a member owned by another member is the proportion which the value of the stock so owned bears to the value of all the outstanding stock in the member. For purposes of this paragraph the term “stock” includes nonvoting stock which is limited and preferred as to dividends.
(6) For purposes of paragraph (a)(4)(i) of this section, if two or more thrift institutions that are both members of the group each owns 5 percent or more of the same member's stock, the member's stock will be considered to be owned only by the thrift institution with the highest applicable percentage.
(b)Intercompany dividends. The deduction determined under paragraph (a) of this section is determined without taking into account intercompany dividends to the extent that, under § 1.1502-13(f)(2), they are not included in gross income. See § 1.1502-13 for additional rules relating to intercompany dividends.
(c)Examples. The provisions of this section may be illustrated by the following examples:
- 26 CFR 1.1502-13 — Intercompany Transactions.
- 26 CFR 1.1502-43 — Consolidated Accumulated Earnings Tax.
- 26 CFR 1.1502-11 — Consolidated Taxable Income.
- 26 CFR 1.1502-24 — Consolidated Charitable Contributions Deduction.
- 26 CFR 1.1502-21A — Consolidated Net Operating Loss Deduction Generally Applicable for Consolidated Return Years Beginning Before January 1, 1997.