In the United States, 80% of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed.I.R.C. § 1504(a); I.R.C. § 243(a)(3). That is, if Company A owns 80% or more of the stock of Company B, Company A will not pay taxes on dividends paid by Company B to its stockholders, as the payment of dividends from B to A is essentially transferring cash within a single enterprise. Any other shareholders of Company B will pay the usual taxes on dividends, as they are legitimate and ordinary dividends to these shareholders.
In the United States 80% of stock in voting and value must be owned before tax consolidation benefits such as tax-free dividends can be claimedIRC § 1504(a); IRC § 243(a)(3) That is if Company A owns 80% or more of the stock of Company B Company A will not pay taxes on dividends paid by Company B to its stockholders as the payment of dividends from B to A is essentially transferring cash within a single enterprise Any other shareholders of Company B will pay the usual taxes on dividends as they are legitimate and ordinary dividends to these shareholders