Question

12:15 NO. + Expert Q&A 0 + 1, what are the requirements for corporations to file a consolidated tax return? 2, what if any benefits are there to filling a consolidated tax return? 3, can a non U.S. corporation join in the filing of a consolidated tax return? 4, how do you determine if a corporation has goodwill for tax purposes? 5 assume corporation records goodwill of $18,000,000 in the current year for an acquisition made on June 30. How much if any of the goodwill is deductible in the current year? 6, would it make a difference to your answer in the previous question if the acquisition was stock of a corporation rather than assets of a business? If so how would your answer change and why? Please answer these questions as soon as possible. Thank you.

can you please answer all these questions. thank you

Answer 1

Solution to the above question:

1) requirements for corporations to file a consolidated tax return are:

(i) to centralise the planning.

(ii) for proper reporting.

(iii) to pay off the tax.

(iv) to offset the profit of one with the losses of other.

(2) Benefits of filing a consolidated tax return are:

(i) recognition of income can be deferred on intercompany transactions.

(ii) losses of one company can be offset against the profits of another company.

(iii) capital gains and losses can be net out.

(iv) any unused foreign tax credit by one company can be used by the other in the group.

(3) Yes, non U.S. corporation join in the filing of a consolidated tax return as long as the parent company satisfies the 80% rule.

(4) Goodwill is a part of Corporate asset and is based on earning capacity. Therefore, Goodwill value rests upon the excess of net earnings over and above a fair return on the net tangible assets.Sale of goodwill reports capital gain. So Goodwill is taxed to the seller at capital gain rates.