Why Should a Corporation That Is 100% Owned by Another

question 42

Essay

Why should a corporation that is 100% owned by another corporation be treated differently when it liquidates than a corporation that is 100% owned by an individual?

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Definitions:

Withholding Taxes

Taxes that employers deduct from employees' wages and pay directly to the government as a part of income tax obligations.

Net Pay

The amount of money an employee receives after all deductions, such as taxes and retirement contributions, have been subtracted from their gross pay.

Allowances

Reductions from the list price of goods or services, granted for various reasons such as defects or customer dissatisfaction.

Wage Base Limit

The maximum amount of income on which employees are required to pay certain taxes, such as social security taxes.