Supreme Court Will Hear Parent-Subsidiary Tax Refund Dispute (1)

The U.S. Supreme Court will hear a case about whether a parent corporation or its subsidiary owns a $4.1 million tax refund.

The case stems from a shared tax return between a parent company and its subsidiaries, and the petition to the high court calls the issue a “multimillion-dollar question.” If the parent owns the refund, a subsidiary may be treated merely as one of the corporate parent’s creditors. This means that if the parent company declares bankruptcy, the tax refund will become part of the bankruptcy estate that all the creditors—including the subsidiary that is owed the ...