References in periodicals archive ?
This lack of guidance has created uncertainty regarding whether disaffiliation has, in fact, taken place.(6)
The second change to the consolidated return rules added by the DRA was a five-year waiting period between a corporation's disaffiliation and reconsolidation with the same affiliated group.(7) The Code prevents a corporation from being consolidated with the original affiliated group (or another affiliated group with the same common parent or a successor to that common parent)(8) before the sixty-first month after the first tax year in which the disaffiliated corporation was not included in the consolidated return.(9) Sec.
These rulings have permitted reconsolidation when the taxpayer established that the disaffiliation and reconsolidation did not secure for any of the affiliated groups or corporations involved the benefit of any deduction, credit or other allowance that would not otherwise have been available if disaffiliation and reconsolidation had not taken place.
The letter rulings were issued in many different circumstances covering a wide variety of situations that resulted first in the disaffiliation of a corporation from a consolidated group and, within a 60-month period from the first tax year of disaffiliation, a desire to reaffiliate the corporation with the same consolidated group.
The overriding factor cited in the letter rulings for securing a waiver is that the parent corporation must be able to represent that the disaffiliation and reconsolidation will not secure for any affiliated group, member of the affiliated group or person the benefit of any deduction, credit or other allowance that would not have been secured had disaffiliation and reconsolidation not occurred.
91-71 requires a waiver if a corporation was a member of a consolidated group, subsequently ceased to be a member of that group, and later rejoined the same group before the sixty-first month after the beginning of its first tax year in which it was not a member of the group.(20) As highlighted earlier, the disaffiliation may be part of a complex plan or it may be totally inadvertent.
A major difficulty arises for unwary taxpayers when the disaffiliation of a subsidiary was inadvertent.
The inadvertence of the disaffiliation is not itself justification for the waiver.
After disaffiliation, C became more profitable but the A-B consolidated group continued to operate at approximately break-even.
Significant difficulty for the unwary is obvious in these rules since unsophisticated taxpayers may not be aware that a disaffiliation and a reaffiliation have occurred in the context of these complex transactions.
The business purpose for the disaffiliation and reaffiliation must be disclosed, as well as whether the transactions involved a related party.
91-71 provides two situations in which no net benefit occurred to the parties involved in the disaffiliation and reaffiliation: (1) the gross income of one affiliated group increased by $100,000 and a deduction of the same group increased creased by $100,000, but the taxable income of the other affiliated group was not affected; (2) the taxable income of one affiliated group decreased by $100,000 and the taxable income of the other affiliated group increased by $100,000.
Medical browser ?
- dirty-tie sign
- disability analysis
- Disability Assessment for Dementia Scale
- disability insurance
- Disability Living Allowance
- disability management intervention team
- Disability Rating Scale
- disability register
- Disability Rights Commission
- disability-adjusted life year
- disability-adjusted life years
- disability-free life expectancy
- disabled infant
- disabled infectious single cycle virus
- disaccharide intolerance
- disappearing bone disease
- Disaster Committee
- disaster medical assistance team
- disaster medicine
- Disaster Mortuary Operational Response Team
- disaster planning
- Disaster Privileges
- Disaster Psychiatry
- disaster recovery plan
- disaster syndrome
- disc electrophoresis
- disc herniation
- disc prolapse
- disc sensitivity method
Full browser ?
- Disaffected Mormon Underground
- disaffected person