3rd Circ. Closes Qualified Subsidiary Tax Election Loophole

Law360, New York (February 12, 2014, 3:09 PM EST) -- The Third Circuit on Wednesday rejected a Pennsylvania-based investment corporation's attempt to avoid taxes on more than $230 million realized from a 2003 stock sale, saying the company violated Internal Revenue Service rules allowing companies to claim the value of their subsidiaries’ assets.

In a unanimous three-judge opinion, judge Franklin Van Antwerpen said shareholders of Wind River Investment Corp. improperly increased the stated value of their stock by claiming income from a qualified subchapter S subsidiary tax election, called a Qsub, allowing them to deem the...
To view the full article, register now.