Tax Law Commons^™

Corporations- Allocation Of Subsidiary's Tax Benefit From Consolidated Return, Thomas B. Ridgley

Michigan Law Review

Defendant parent corporation received from its subsidiary 3,556,992 dollars in tax benefits which had accrued to the subsidiary from filing a consolidated income tax return. By agreement between parent and subsidiary, the profit-making corporation was to pay the losing corporation the savings created by the consolidated return. The working relationship of the two assured the subsidiary profits and the parent losses. Consequently, nearly all tax benefit inevitably flowed to the parent. Plaintiffs, the subsidiary's minority stockholders, sought a refunding of benefits allocated to defendant, claiming that the agreement was unfair and alleging that the defendant, as the subsidiary's majority shareholder, …