A nonaffiliated 10 percent owned corporation refers to a corporation that is not part of a taxpayer's affiliated group. This term is significant in tax law, particularly in determining how income is sourced for tax purposes. Specifically, it applies when members of the taxpayer's affiliated group own 10 percent or more of the total voting power of the corporation's stock that is entitled to vote.
This term is primarily used in tax law, especially in contexts involving corporate taxation and international tax treaties. Understanding whether a corporation qualifies as a nonaffiliated 10 percent owned corporation can impact how income is reported and taxed. Users may find legal forms related to corporate structures and tax filings useful in managing their obligations.
Here are a couple of examples of abatement:
Example 1: A corporation, XYZ Corp, is owned entirely by individuals who are not part of the affiliated group of a larger company, ABC Inc. If ABC Inc. owns 15 percent of XYZ Corp's voting stock, XYZ Corp qualifies as a nonaffiliated 10 percent owned corporation.
Example 2: A taxpayer is part of a group that owns 20 percent of another corporation, but the corporation is not affiliated with them. This corporation would also be classified as a nonaffiliated 10 percent owned corporation.
According to 26 USCS § 864, the definition and implications of a nonaffiliated 10 percent owned corporation are outlined. This statute is crucial for understanding how income is sourced and taxed for such corporations.
| Term | Definition | Key Differences |
|---|---|---|
| Affiliated Corporation | A corporation that is part of a taxpayer's affiliated group. | Affiliated corporations are included in the taxpayer's group, while nonaffiliated corporations are not. |
| Controlled Corporation | A corporation where a single entity or group holds a majority of voting power. | Controlled corporations have majority ownership, unlike nonaffiliated 10 percent owned corporations. |
If you believe your corporation qualifies as a nonaffiliated 10 percent owned corporation, consider reviewing your corporate structure and ownership details. It may be beneficial to consult with a tax professional to ensure compliance with tax laws. Additionally, you can explore US Legal Forms for templates that can assist in managing your corporate and tax obligations.
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It is a corporation not part of a taxpayer's affiliated group, where members of that group own 10 percent or more of the voting stock.