Taxation and State Taxation -- 2001
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United Dominion Industries, Inc. v. United States
(U.S. Supreme Court)
Tax carryback of product liability losses
The Supreme Court 6/4/01 held that an affiliated group of corporations filing a single consolidated income tax return pursuant to 26 U.S.C. ยง 1501 must calculate its "product liability loss" for carry-forward and carry-back purposes on a consolidated, single-entity basis rather than on a separate-member basis aggregating the product liability losses of the constituent companies. The case is important to corporate taxpayers that file, or are considering filing, a consolidated return with affiliated corporations.
The NAM filed an amicus brief in support of this result on 1/11/01. We believe this decision is the correct result both as a matter of law and from an administrative point of view. Requiring consolidated groups to determine product liability losses on an individual member basis would create an administrative nightmare and lead to massive litigation.
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