SALT Report 3004 – In the latest edition of Nevada Tax Notes, the Department of Taxation addressed legislation that allows non-retail businesses that are affiliated with a retailer to claim a bad debt deduction on contracts in which sales tax has already been reported.
Specifically, Senate Bill 152 provides that a retailer who assigns a debt to an entity who is part of an affiliated group, that includes the retailer, may claim any deduction or refund to which the retailer would generally be entitled to. This applies regardless of:
- The assignment of the debt to the entity, or
- That the debt is written off as a bad debt in the business records of the entity, and
- That the bad debt is eligible to be claimed as a deduction by the entity pursuant to Internal Revenue Code, 26 U.S.C. § 166
For purposes of this legislation, an “affiliated group” is defined as:
- An affiliated group as defined in Internal Revenue Code, 26 U.S.C. § 1504(a); or
- A controlled group of corporations as described in Internal Revenue Code, 26 U.S.C. § 1563(a)(2)
The provisions in Senate Bill 152 were effective on July 1, 2013.
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