Common use of FACTS Clause in Contracts

FACTS. (A) P owns DRCX, a member of the P consolidated group. DRCX owns FSX. Under the Country X consolidation regime, a consolidated group may elect in any given year to use all or a portion of the losses of one consolidated group member to offset income of other con- solidated group members. If no such election is made in a year in which losses are gen- erated by a consolidated member, such losses carry forward and are available, at the elec- tion of the consolidated group, to offset in- come of consolidated group members in sub- sequent taxable years. Country X law does not provide ordering rules for determining when a loss from a particular taxable year is used because, under Country X law, losses never expire. In addition, Country X law does not provide ordering rules for determining when a particular type of loss (for example, capital or ordinary) is used.