What is the benefit of filing a consolidated return and what are the ownership requirements for...

What is the benefit of filing a consolidated return and what are the ownership requirements for filing a consolidated return?

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Benefit of filing a consolidated return:

1. Loss of one company can offset the profit of another company resulting in tax savings.

2. Capital gains and losses can also be netted off which becomes a huge advantage especially for manufacturing and investment companies.

3. Intercompany transactions are netted off which results in defferment of tax on income of intercompany transactions.

4. Unused tax credit of one company can be used for another company.

Ownership Requirements:

Ideally, any company which is being covered under the definition of includible companies in an "affiliate group" are eligible for filing a consolidated return. Affiliate group is formed when the entities within it are connected by stock ownership both in terms of number of shares and values. It is provided that the parent company should own atleast 80% of the stock in value and number of atleast one of the includible corporations.

ekkarill92 answered 1 year ago

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