Lee A. Sheppard has published Elect Your Subsidiary Loss, Part 2, 106 Tax Notes 1129 (March 7, 2005), also available on the Tax Analysts web site as Doc 2005-4409, 2005 TNT 44-4. Here is part of the opening:

The corporate division of the IRS chief counsel’s office could use some toughening up as well. At the 11th hour, just before large groups have to file their 2004 consolidated returns, the IRS finalized some unsatisfactory temporary regulations on how to trace losses on the sale of subsidiary shares. These final regulations are a stopgap necessitated by the expiration of temp. reg. section 1.337(d)-2T, which was published on March 7, 2002. We are told that we will have an alternative method for calculating the allowable loss on the sale of subsidiary shares sometime in our lifetimes.