Affiliation Privilege
Summary of Affiliation Privilege
Tax relief which a firm receives because it controls, is controlled by, or is under common control with another firm. For example, company A derives significant tax credits from investments in new plant and equipment, but does not have sufficent earnings to fully utilize the credits; company B, the parent of company A, has taxable earnings but limited deductions and credits. Because of the affiliation between A and B, company B will use the tax credits of its subsidiary to reduce its own tax liability.
(Main Author: William J. Miller)