Legal Question in Business Law in California

How do I create a business with subsidiaries that can use tax write-offs?

Asked on 6/02/13, 9:30 am

3 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

The term "tax write-off" refers to an accounting transaction in which the book value of an asset or group of assets is reduced or zeroed. This can happen when the asset is depreciated or amortized normally, over time, or can occur suddenly due to a casualty such as a fire, flood, etc. Occasionally, assets can be written down or written off due to obsolescence, but I think this practice is restricted by the tax codes. I don't think the presence or absence of subsidiaries or being a subsidiary has any direct or necessary connection with tax write-offs. Most businesses with subsidiaries will have consolidated tax returns where the existence or non-existence of a subsidiary will have little or no effect on tax liability. Finally, write-offs are of little or no value unless there is also income which might give rise to a tax liability in the first place. Also, this is more of a question for a tax accountant than an attorney.

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Answered on 6/02/13, 10:42 am

William Christian Rodi Pollock

You create corporations or LLC's by filings with the Secretary of State. Subsidiaries are separate entities owned by a parent. They do not necessarrily generate tax losses (unless they are losing money or encountering a tax loss from depreciation or other non cash flow deductions).

Unfortunately the form of your question really does not make sense. What, exactly, are you trying to accomplish. Entity formation and the creation of subsidiaries is a tool to accomplish business and tax planning goals. First you need to understand the goals to be accomplished. THen you use those to select teh appropriate entity and business structure. See an attorney!!!

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Answered on 6/03/13, 10:06 am
Terry A. Nelson Nelson & Lawless

By hiring and following the advice of experienced tax attorneys and corporate attorneys.

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Answered on 6/05/13, 1:11 am

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