however, that the Preamble to the proposed regulation states that the proposed regulations “clarify that a disregarded entity is a person for purposes of Regulation 1.881-3,” implying that the IRS does not need the proposed regulation's change to effect this result. 24 Consequently, practitioners practicing in this area should employ caution both before and after the proposed regulation becomes final. Dual Consolidated Losses. The dual consolidated loss (DCL) rules are generally intended to prevent companies with tax residency in two different jurisdictions from using the same losses to obtain tax benefits in both jurisdictions. The provisions in Section 1503(d), and the consolidated return regulations that disallow the use of a DCL, generally treat a DRE as a separate entity. 2 An example of a DRE to which the DCL rules may apply is the so-called “hybrid entity,” which is an entity that is disregarded for U.S. tax purposes but is subject to an entity-level income tax by a foreign country. “ The purpose of the DCL provisions, as applied to a domestic corporation that owns a hybrid entity, is to prevent a single net operating loss (NOL) generated by a DRE from being used in both the U.S. and in a foreign jurisdiction. ” The DCL rules apply only to a dual resident corporation (DRC). A DRC is a domestic corporation or a separate unit of the domestic corporation (e.g., a hybrid entity that is a DRE for U.S. tax purposes) that is subject to U.S. tax on its worldwide income and a foreign jurisdiction's tax on its worldwide income or with respect to its separate unit's worldwide income. “ Without the general disallowance of the DCL to the DRC, use of the DCL could occur in both the U.S. and the foreign jurisdiction because the DRC could offset its own income with the NOL generated by the DRE for U.S. tax purposes, and that NOL might also be used for foreign tax purposes against income that may not be subject to U.S. tax. 7 In general, the DCL rules forbid a DRC from reduci