Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 170.0064


170.0064 Parent's Liability for Subsidiary's Tax. A parent corporation is not liable for the taxes due from its subsidiary unless the companies are so clearly related that they share a single identity. To determine whether the parent and its subsidiary share a single identity, the following factors were considered by the court in the case of In re Prezant & Co, 24 AFTR 2d 69–5623 (DCND Ill. 1969):

(1) The parent owned all of the stock of the subsidiary.

(2) They shared the same officers and facilities.

(3) They function as a single unit.

(4) The subsidiary only dealt with the parent company.

(5) There were minimum amounts of paid-in capital. (For example, inter-company transfers were frequently used to meet obligations.)

Other factors which may be considered are found in Witkin, Summary of California Law 11 (8th ed 1974).

(6) The parent owns the building and the furniture.

(7) Both employ the same attorney. 9/8/77.