Problems in consolidated returns;

              THE DETERMINATION OF WHETHER OR NOT A CONSOLIDATED RETURN
is advantageous in a given situation in which separate returns can
also be filed, can be readily made and does not usually involve many
complicated problems or computations. At the outset of the considera­tion
to file consolidated returns, comparisons should be made between
the tax on a consolidated basis and the tax on a separate basis not only
for the first year for which consolidated returns are to be filed, but also
for a number of future years, on the basis of the best available fore­casts.
The results of these computations will afford an opportunity to
consider the immediate advantages of filing a consolidated return and
to compare them with some of the factors in the future and evaluate
them in the light of problems which may arise. This is important
because once consolidated returns are filed for any taxable year, such
returns must generally be filed for subsequent years during which the
consolidated group remains in existence.
In the field of consolidated returns, the provisions of the Code relat­ing
to such returns are brief and cover only 5 pages, whereas the regu­lations
are in great detail and encompass more than 80 pages. The
members of an affiliated group may file a consolidated return only if
they all consent to all the consolidated return regulations prescribed
prior to the last day prescribed by law for filing such return. The
PROBLEMS IN
making of the consolidated return is considered as such consent. Con­gress
has decided not to legislate in detail in the field of consolidated
returns, and the Senate Finance Committee reports have noted that
because of the complexities of the subject it is possible to deal with
frequent amendments more easily in the form of regulations. More­over,
the regulations have become generally accepted over a period of
many years, and may be said to be legislative by Congressional
direction.
Creation of an Affiliated Group
The privilege of filing consolidated returns has been limited to
includible corporations. These are generally any domestic corporations
12 THE QUARTERLY