Holding company: Difference between revisions

 

{{Merge to |Consolidation (business)|date=January 2019}}

 

In the [[United States]], 80% of stock, in voting and value, must be owned before [[tax]] consolidation benefits such as [[Dividends received deduction|tax-free]] [[dividend]]s can be claimed.<ref>I.R.C. § 1504(a); I.R.C. § 243(a)(3).</ref> That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay [[dividend tax|taxes on dividends]] paid by Company B to its stockholders, as the payment of dividends from B to A is essentially transferring cash from one company to the other. Any other shareholders of Company B will pay the usual taxes on dividends, as they are legitimate and ordinary dividends to these [[shareholder]]s.