No bad debt deduction for intercompany transfer
Article Abstract:
The Tax Court ruled that subsidiary corporation was not eligible for a bad debt deduction for funds that a parent firm withdrew from the intercompany bank account. The Tax Court cited Reg 1.66-1(c) that contains provisions limiting bad debt deductions to loans resulting from genuine debtor-creditor relationships. The provisions were based on valid and enforceable obligations associated with the payment of fixed sums of money. The court also found no evidence of any promissory notes or securities transactions between the parties. There were even no maturity dates and no repayments or terms of repayments. Meanwhile, the IRS argued that the debt would have been a loan receivable on the books of the subsidiary even if the subsidiary had been permitted to deduct the amount as bad debt.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
Adapt gift-giving strategies to fit certain circumstances
Article Abstract:
Family wealth transfers structured as gifts can become complicated because of special issues involving transferor and/or transferee. These include transfers being made by transferors or gift givers who either are incompetent due to accident, disease or senility, lack adequate liquid assets to pay the attendant transfer costs, are undergoing marital problems, or have existing problems with creditors. For transferors with special problems, family wealth transfers may be structured to preserve the givers' cash flow, minimize estate administration tax costs and better conserve assets to be passed to younger generations. Lifetime gift giving is, therefore, an important factor in family estate planning arrangements.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Companies plan for near-term offerings; many private businesses now operate with an eye to ultimate initial public offerings or sales
- Abstracts: Putting a price on life and death. UK praised for manual handling efforts as most member states do the minimum
- Abstracts: What can Eastern philosophy teach us about business ethics? Motivating employees to act ethically: an expectancy theory approach
- Abstracts: The political economy of a bilateral investment treaty. International relations theory, international law, and the regime governing atrocities in internal conflicts
- Abstracts: If activity is not a business, the loss is capital. Keeping company afloat was not reasonable cause