Consolidating 100 owned subsidiary

04-Nov-2019 05:45

In order for the tax laws of subsidiaries to be applicable, the business must first meet the definition of a subsidiary under the tax code but this requires meeting very specific criteria.

The two minority interest line items are the net difference between what would have been the common equity and net income to common, if all subsidiaries were fully owned, and the actual ownership of the group.

The shareholders do not have to pay taxes on shares they receive from qualified spin-offs.

To qualify, the spin-off has to be for a legitimate business purpose other than avoiding taxes.

All of the businesses in the affiliated group are subsidiaries except the parent.

To qualify as an affiliated group, the parent must directly own 80 percent of at least one of the subsidiaries’ voting stock and its stock in general.

For other subsidiaries to qualify, 80 percent of the voting stock and general stock of the company in question must be owned by one or more of the other corporations in the affiliated group. Company C’s stock is only owned by Companies A and B.