TaxConnections

Ask Tax Question

What is the best way to allocate headquarter expenses to the subsidiaries outside the U.S.A.?

Expenses Foreign Subsidiaries Allocation of Expenses
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
JEANIE PITNER
This is a really good question; first I want to say I am not an expert in foreign taxes, but I do understand cost allocation. One approach is based on percentage of gross income earned. For example Subsidiary A gross income = $100K Subsidiary B gross income = $100K and Headquarters C gross income = $200K Total income for Headquarters and its subsidiaries= $400K
This means in percentage terms A and B = 25% and C = 50%. You would then times the total amount of the headquarter expenses to be allocated by the appropriate percentage amount and then allocate that amount to the subsidiaries.
Leave a Comment 256 weeks ago



Meet Leading Tax Advisors

User Photo John Stancil

Lakeland, Florida, USA

Tax Advisor/CEO

User Photo Peter J. Scalise

New York, New York, USA

Federal Tax Credits & Incentives Practice Leader

User Photo John Dundon, II EA

Denver, Colorado, USA

Tax Director

 

View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page

INCREASE KNOWLEDGE WITH EVERY ISSUE OF TAXCONNECTIONS

 

Learn from tax advisors, straight to your inbox

Update My Email Address
Contact Us Today