Lehman Brothers Financial SA (LEHNQ)

[Joe Stocks]

>>corporations that elect either to file a consolidated return <<

There are restrictions on who can file a consolidated tax return. Lehman would not be eligible. Each corporation filed their own bk petition. They did not file consolidated tax returns. Consolidated tax returns is different from a company that reports consolidated earnings in a 10k/Q for the benefit of the public. The IRS has laid out many rules and definitions as to how affiliate companies are legally allowed to consolidate and file. Lehman did not want to be seen legally as one entity.

Understanding a Consolidated Tax Return

A consolidated tax return combines the tax liability of all includible corporations in an affiliated group. The companies legally permitted to partake in the consolidated group must be includible companies. An includible company, defined by tax law, is any corporation except for certain insurance companies, foreign corporations, tax-exempt corporations, regulated investment companies, real estate investment trusts, and S corporations.

An affiliated group is legally defined as "one or more chains of includible corporations, connected through stock ownership, with a common parent corporation."1? The specific tax law defines this as where the parent corporation owns 80% or more of the voting power and 80% or more of the value of the stock of at least one of the other includible corporations in the group. Corporations in the group must then also have their voting power and value of their stock 80% owned by one or more of the other corporations.

https://www.investopedia.com/terms/c/consolidated-tax-return.asp