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Corporate Tax Law Questions

All around the world there are corporations, some are big and some are small, but they all have to pay taxes. Corporate tax law may vary greatly from country to country or even state to state. Corporations just like individuals earn income and have to pay corporate taxes on the income that has been made for the year. Below are questions that individuals have asked the Experts in regards to corporate tax laws.

What is corporate tax?

Around the world there are several countries that on the income of certain types of entities impose a tax known as a corporate tax. In some countries this tax may also be placed upon by corporations or companies by state or local taxing authorities. Entities that are handled like partnerships are as a rule not taxed at the same level as other legal entities such as corporations. Also while most countries impose this tax upon all corporations that do business in that country on the income made in that country, there are also countries that tax all of the income made by corporations that are organized within the country. Corporate tax is determined often like an individual’s taxable income is determined, which means in the majority of case the corporate tax is applied to the net profits of a corporation. While this is true for some countries, there are also other areas that the determination of how corporate tax is significantly different than that of individuals.

Can a corporation that owns several other corporations file one consolidated corporate tax return?

Yes it is possible for a corporation that owns several other subsidiary corporations to file a consolidated corporate tax return. However, if a corporation chooses to file a consolidated corporate tax return there are a few rules they need to be aware of. One of the rules is that the parent corporation must own at a minimum 80% of voting stock of the subsidiary corporations that are being consolidated. Secondly each subsidiary will have to file a Form 1122 which gives authorization to be included in the consolidation and to be part of the consolidated corporate tax return. This will only need to be done the first year that the subsidiary has agreed to be part of the consolidation. Also most importantly the corporation must be aware that the consolidation is binding, and if the corporation finds that filing a consolidated return is not going to be in the best financial interest of the corporation there are only two ways to fix this. The first is to dismantle the affiliated group legally, so that a consolidated corporate tax return is not possible. The other option is to make a request to the IRS for permission to again file separate tax returns for the subsidiaries.

What is bonus depreciation in regards to a corporate tax return?

In regards to corporate tax return bonus depreciation is an allowance for 100% bonus depreciation on assets that are newly purchased and placed into service in 2011, as long as the assets have a MACRS recovery life that is 20 years or less.

Is there a monetary penalty for filing a corporate tax return late?

Yes there is a monetary penalty for filing a corporate tax return late. However it is usually not a significant penalty and is usually accrued monthly until the corporate tax return is filed.

A corporate tax is a tax that is imposed upon the income made by a corporation. The corporate tax may be determined much like the tax on an individual’s income, but there may be some case in which it is not normally determined like an individual’s income. However there are rules that should be looked over before going in to consolidation. Any questions regarding corporate tax laws are able to be asked of the Experts.
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