Loss Disallowance Rule - LDR

AAA

DEFINITION of 'Loss Disallowance Rule - LDR'

An Internal Revenue Service rule implemented in 1991 to prevent a consolidated group - a business conglomerate filing a single tax return on behalf of its subsidiaries - from taking a tax deduction for losses on the sale of a subsidiary's stock. The IRS wanted to make sure corporations paid taxes on their capital gains and wanted to prevent them from claiming the same loss twice as a tax deduction - known as a duplicated loss.

INVESTOPEDIA EXPLAINS 'Loss Disallowance Rule - LDR'

An important court case for the loss disallowance rule was Rite Aid Corp v. United States. In this case, the Federal Circuit Court of Appeals rejected the IRS's duplicated loss component of the loss disallowance rule.



RELATED TERMS
  1. Rental Real Estate Loss Allowance

    A federal tax deduction of up to $25,000 that is available to ...
  2. Consolidated Tax Return

    A comprehensive tax return that encompasses a group of smaller ...
  3. Conglomerate

    A corporation that is made up of a number of different, seemingly ...
  4. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
  5. Parent Company

    A company that controls other companies by owning an influential ...
  6. Wholly Owned Subsidiary

    A company whose common stock is 100% owned by another company, ...
Related Articles
  1. Investing Basics

    Conglomerates: Cash Cows Or Corporate Chaos?

    Huge companies may not be as infallible as previously assumed. Find out why bigger isn't always better.
  2. Investing Basics

    Sneaky Subsidiary Tricks Can Cloud Financials

    Use consolidated financial statements to uncover a parent company's true performance.
  3. Investing

    Use Breakup Value To Find Undervalued Companies

    Find out a company's worth if it were sold in pieces - it may be more than you think.
  4. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  5. Taxes

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.
  6. Taxes

    Switzerland's Declining Tax Haven Appeal

    Switzerland's tax haven allure is being threatened by efforts by the US and other governments to make Swiss banks give up their much-vaunted secrecy.
  7. Taxes

    Are You Missing Out On These Tax Exemptions?

    To lower your tax bill, make sure that you're taking all the exemptions that apply to you.
  8. Taxes

    Is It Smart To Get Dual Citizenship?

    Does it ever make sense to be a citizen of the U.S. and somewhere else? Yes, so you can work minus a visa – not so much, if you get drafted into the army.
  9. Taxes

    The Fundamentals of Draghinomics

    European Central Bank President Mario Draghi has introduced a set of reforms aimed at reviving the eurozone economy.
  10. Retirement

    Expat In America: Visas To Retire In the U.S.

    It isn't easy for non-citizens to retire in the United States unless a family member is already a citizen. But some visas will allow for longer visits

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center