Client Profile
Industry: | Manufacturing | Annual Revenue: | >$500 million | Entity Structure: | Consolidated Group | Geographic Footprint: | National | Ownership Structure: | Public | |
Issue
A large manufacturer filed a combined corporate income tax return for its 100 legal entities in New York. A state audit removed approximately 95 of the entities, all of which operated at a loss, on the basis that they should not be included in a combined filing. As a result, the manufacturer faced $2.7 million in additional taxes.
Solution
With the help of our national state and local tax controversy group, the taxpayer protested the assessment. Our team provided documentation that demonstrated the unitary nature of the entities and supported the entities’ proper inclusion in the original combined filing.
We took a deep dive into the company, interviewing key personnel and sifting through volumes of information. Among other evidence, the interrelated nature of the corporate entities was proven by the manufacturer’s unified approach across corporate lines to solicit and secure new business. Additionally, alternative computations established a substantial level of intercorporate transactions.
Outcome
The examples uncovered helped to eliminate the $2.7 million assessment. We also assisted in securing the release of the manufacturer’s previously suspended tax benefits, which were valued at more than $1 million.
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