Company A and Company B are party of a wholly owned group.
The wholly owned group is consolidated for tax purposes.
Company B owes Company A $450k for tax purposes.
If Company A would like to write the debt off, how would the commercial debt forgiveness rules apply
in a consolidated tax environment?
If the debt owed by company B is written off by company A while both companies are members of a tax
consolidated group, this transaction would be ignored under the single entity rule. The commercial debt
forgiveness rules would have no application to this transaction.
Please refer to TR 2004/11 for further information.