Several items within the regulations don't make sense when applied to the real estate investment industry.
The overriding issue is that DC, unlike other states, applies an entity level tax on pass-through entities (unincorporated businesses) and is attempting to apply corporate income tax rules to pass-through entities (unincorporated businesses). Hence, the normal application of combined returns (i.e., nexus, unitary rules, apportionment, elimination of intercompany transactions) is not reflected in DC's combined regulations which is causing confusion or unintended consequences.
Hopefully some clarification or changes will occur before next year's filing season. However, companies with transactions may need to act before year-end (12/31/2012).
If your firm or company is dealing with these issues, please contact me to discuss.
See my earlier posts for more information.