Section 168

in the case of a Permanent Establishment through which the business of the Entity is wholly or partly carried out, the Financial Accounting Net Income or Loss of the Entity is allocated to that Permanent

Establishment in accordance with section 167;

in the case of a Tax Transparent Entity that is not the Ultimate Parent Entity, any Financial Accounting

Net Income or Loss remaining after application of paragraph (a) is allocated to its Constituent

Entity-owners in accordance with their Ownership

Interests; and

Finance (No. 2)

in the case of a Tax Transparent Entity that is the

Ultimate Parent Entity or a Reverse Hybrid Entity, any

Financial Accounting Net Income or Loss remaining after application of paragraph (a) is allocated to it.

Subsection (1) shall be applied separately with respect to each Ownership Interest in the Flow-through Entity.

Prior to the application of subsection (1), the Financial

Accounting Net Income or Loss of a Flow-through Entity shall be reduced by the amount allocable to its owners that are not Group Entities and that hold their Ownership

Interest in the Flow-through Entity directly or through a Tax

Transparent Structure.

Subsection (3) does not apply to—

The Financial Accounting Net Income or Loss of a Flow-through Entity is reduced by the amount that is allocated to another Constituent Entity.