Tax News

CCH (cch.taxgroup.com) reports:

  A Massachusetts corporation excise taxpayer's abatement of tax was upheld by the state's highest court, where the tax-free liquidation of a subsidiary by the parent corporation pursuant to IRC Sec. 332 did not result in the disposition of assets for purposes of the parent retaining the state investment tax credit of its liquidated subsidiary. IRC Sec. 332 provides that no gain or loss is to be recognized on the receipt by a corporation of property distributed in a complete liquidation of another corporation. The tax-free liquidation of the subsidiary by the parent was merely a change in form and not in the basis of the assets upon which the investment tax credit was based. The Massachusetts Department of Revenue sought recapture of the investment tax credit because they asserted that the assets underlying the investment tax credit were disposed of before the end of their useful life.

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Commissioner of Revenue v. The Gillette Company , Supreme Judicial Court of Massachusetts, SJC-10298, June 11, 2009