3‑165 Adjustment—Aggregate Asset Gain—al3‑165 Adjustment—Aggregate Asset Gain—allocation of amounts

3‑165 Adjustment—Aggregate Asset Gain—allocation of amounts

(1) This section applies if an election for an MNE Group under subsection 3‑155(2) applies to a jurisdiction and to a Fiscal Year (the application year). (2) For the purposes of section 3‑160, the amount allocated to a Constituent Entity of the MNE Group located in the jurisdiction for a Fiscal Year in the election’s Look‑back Period (a Look‑back Year) is the sum of the following: (a) the Constituent Entity’s set‑off amount for that year (see subsection (3) of this section); (b) the Constituent Entity’s remainder amount for that year (see subsection (5) of this section). Set‑off amounts (3) Compute set‑off amounts as follows: (a) first, compute the amount of the MNE Group’s Aggregate Asset Gain for the application year; (b) next, for each Loss Year, compute the amount of the Net Asset Loss for each Constituent Entity of the MNE Group located in the jurisdiction; (c) next, apply the amounts of Net Asset Loss (to the extent they have not already been applied under this paragraph in respect of an election for a previous year), in accordance with subsection (4), to reduce the amount computed under paragraph (a) of this subsection (but not below zero). A Constituent Entity’s set‑off amount for a Look‑back Year is the amount of the Constituent Entity’s Net Asset Loss for that year that is applied under paragraph (c). (4) For the purposes of paragraph (3)(c): (a) apply the amounts in sequence, where an amount for an earlier Loss Year is applied before an amount for a later Loss Year; and (b) amounts may be applied in part.

Note: As a result of paragraph (4)(b), part of an amount of Net Asset Loss of a Constituent Entity of the MNE Group for a Loss Year may be applied to reduce the amount of the MNE Group’s Aggregate Asset Gain for the application year to zero.

Remainder amounts (5) If the result of paragraph (3)(c) is not zero, compute the remainder amount of a Constituent Entity of the MNE Group located in the jurisdiction for each Look‑back Year in accordance with subsection (6) or (7). (6) If one or more Constituent Entities of the MNE Group located for the Look‑back Year in the jurisdiction have a Net Asset Gain for the application year, compute the remainder amount in accordance with the following formula: Start formula start fraction Remainder over 5 end fraction times start fraction CE’s gain over Total gain end fraction end formula where:

CE’s gain means the Constituent Entity’s Net Asset Gain for the application year.

remainder is the result of paragraph (3)(c).

total gain means the total of the amounts of Net Asset Gain of all Constituent Entities of the MNE Group located in the jurisdiction for the application year.