If the subsidiary can be eligible for the ‘environmental research’ then there is plenty of room for mistreatment. This is not a tax motivation, correct, but this isn’t an investment in the surroundings either. This doesn’t allow for anything that isn’t already allowed. From what we realize it just requires them to invest in technology that’s industry specific or improvements to their company to make it greener. There’s nothing at all they can do this they cant’ do already right now. I just can’t think of anything new this would bring to the table. Shareholders can take dividends from a corporation that exceed income and show a loss on the written books.
Not without having retained earnings i believe. Technically if you have retained earnings from prior intervals you’ve ‘reserved’ the right to pay out dividends. But without that I don’t think so. And what would be the true point? The dividends would be the same if they came from the parent company precisely, taxed at the same rate.
If the mother or father company pays the dividends instead of moving it to a fresh business – it might be the same taxes paid. There would be no difference. And you have to have retained income to pay dividends. But lets say for a moment that this holds true – there would be nothing to avoid them carrying it out now – just what exactly would the difference be? Yes, this can happen indeed. Why are you pretending it cannot? I said it could happen – exactly like they COULD burn all their money on the yard. But nobody’s going to do that.
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EDIT: Are you saying that nobody creates subsidiaries to skirt commercial tax laws? You want a good example of money laundering through subsidiaries and also you say I’m uninformed? Lets go through it gradually, step by step. Company A makes a income of 100 dollars. 10 dollars in corporate taxes on that money.
So – your recommendation is that they might make investments the 100 dollars into a new company it doesn’t actually make hardly any money. So – the company’s profit becomes zero. Which is actually harmful to companies if it keeps taking place. So – now company b has 100 dolllars but isn’t producing anything, so it goes through the 100 dollars.
But – it’s somehow heading to pay divideds. Where’s that money come from? And exactly how without retained profits? Now – imagine if they’d left the money in company A. they could actually declare a dividend of 100 dollars. The taxes on that might be the same to the share holders. In addition, the company could use the money to invest in a PROFITABLE company and make money from it’s investments.
And merely to complicate things – what, you are going to just Supply the current shareholders the same amount of shares in the new company and hope nobody buys or offers any? Because if i don’t have stocks in the new company and i’m buying stocks in the old one i’m going to get fairly pissed if someone transfers all the revenue out. Therefore the stocks of the old company become worthless. So you’ve just moved the money backwards and forwards for no reason? I mean – i have no idea how else to say this. What you’re talking about fails and if it do people still wouldn’t take action. You’re not understanding how corporate taxes work. As well as if what you say WERE accurate which it blatantly is not, they could take action anyway irrespective.
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There are, however, other differences in the two types of legal entities which have an effect on entity is best suited for a specific business. For instance, Florida charges higher annual fees for limited partnerships than for LLCs. Many CPAs believe that LLCs are more versatile entities for tax planning. Used, partnerships are additionally used for real estate investments, whereas, LLCs appear to be chosen to possess operating businesses.
However, as time goes on, the entities appear to be more interchangeable for business planning. Again, for asset security the LLC and partnership have similar security. A restricted partnership or limited liability company works for asset protection and/or tax planning only if you transfer assets from your name into the name of the entity.