projected earnings

(3) Projected earnings (A) The term “projected earnings” means the “average annual earnings” (as defined in subparagraph (B)) of— (i) the issuing corporation only, if clause (ii) does not apply, or (ii) both the issuing corporation and the acquired corporation, in any case where the issuing corporation has acquired control (as defined in section 368(c)), or has acquired substantially all of the properties, of the acquired corporation. (B) The average annual earnings referred to in subparagraph (A) is, for any corporation, the amount of its earnings and profits for any 3-year period ending with the last day of a taxable year of the issuing corporation described in paragraph (1), computed without reduction for— (i) interest paid or incurred, (ii) depreciation or amortization allowed under this chapter, (iii) liability for tax under this chapter, and (iv) distributions to which section 301(c)(1) applies (other than such distributions from the acquired to the issuing corporation), and reduced to an annual average for such 3-year period pursuant to regulations prescribed by the Secretary. Such regulations shall include rules for cases where any corporation was not in existence for all of such 3-year period or such period includes only a portion of a taxable year of any corporation.

Source

26 USC § 279(c)(3)

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Scoping language

None identified, default scope is assumed to be the parent (part IX) of this section.

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