Bankruptcy Tax Update | USA
In this Chambers Expert Focus podcast, tax co-chair Joseph Pari and partner Stuart Goldring of Weil, Gotshal and Manges LLP discuss how corporations and non-corporate taxpayers can monetise tax losses inherent in the stock of subsidiaries.
Retaining the business of the subsidiary
Joe explains that it may be possible to monetise a tax loss yet retain the business of the subsidiary.
Two different situations are discussed:
- where the stock of the subsidiary is worthless; and
- where the subsidiary is not worthless, but it is worth significantly less than the amount invested in it.
The latter situation requires more tax planning.
Worthlesssness
The fair market value of a subsidiary's assets should be compared to the amount of its liabilities.
Converting to an LLC is one option.
There is an important distinction between ordinary losses and capital losses.
“act cautiously when dealing with holding companies”
Washington Mutual Bank
Stuart discusses the case of Washington Mutual Bank and its holding company.
Weil, Gotshal & Manges LLP
