(1) The second choice is to reduce under this section the * adjustable value of each leaving asset (a loss asset ) for which the * head company would have had a notional capital loss, or notional revenue loss, under section 165-115F at the time (the test time ) just before the leaving time if the test time had been a * changeover time for the head company. The choice has effect accordingly.
Note: The consequences of the choice are worked out under this section and section 715-145.
(a) 2 or more entities cease to be * subsidiary members of the * consolidated group; and
(b) 2 or more of them make the second choice;
the choices have effect in the same order as the entities cease being subsidiary members. If 2 or more of the entities ceased at the same time, their choices have effect in whichever order the * head company determines.
(3) This section applies to each of the loss assets in order, according to their respective * adjustable values (apart from this section) at the test time: from largest to smallest. (If an asset has more than one such adjustable value, use the greater or greatest of them.)
(4) At the test time, the * adjustable value of the loss asset is reduced to the asset's * market value at that time.
(5) However, if the * loss denial balance (as reduced by any previous reductions under this section or section 715-160) of the * head company's * loss denial pool is less than the difference between:
(a) the * adjustable value of the loss asset (apart from this section) at the test time; and
(b) the asset's * market value at the test time;
the adjustable value is instead reduced at the test time by that loss denial balance.
(6) That * loss denial balance is reduced at the leaving time by the amount of the reduction under subsection (3) or (4). If 2 or more such reductions are made for the same asset (because it has 2 or more different characters), that loss denial balance is reduced by the greater or greatest of the reductions.