(a) Each corporation included in the combined return is to compute its entire net income as if it had filed its Federal income tax return on a separate basis. Then, to compute combined entire net income, all intercorporate dividends and intercorporate transactions between the corporations included in the combined return must be eliminated. In applying the foregoing, intercorporate profits are deferred, capital losses are to be offset against capital gains and contributions are to be deducted as if the corporations in the group had filed a consolidated Federal income tax return.

(b) If any corporation included in the combined return makes the IBF election pursuant to section 19-2.3 of this Title, all corporations included in the combined return will be deemed to have made the election.

(c) In no event will an item of income or expense of a corporation organized under the laws of a country other than the United States be included in a combined return unless it is includible in entire net income or alternative entire net income.

(d) As to when combined returns will be permitted or required, see Subpart 21-2 of this Title Combined Returns.