Affiliated group,

Definition of Affiliated group:

1. A group of companies with a common parent connected through stock ownership for the purpose of netting one companys loss against the profits of another. The group files a consolidated tax return. Members own at least 80% of total voting power and subsidiary or stock value of the companies involved. Also called consolidated group.

2. An affiliated group is two or more corporations that are related through common ownership but are treated as one for federal income tax purposes. An affiliated group consists of a parent corporation and one or more subsidiary corporations. The parent corporation must own at least 80% of its subsidiary's stock and consolidates the subsidiaries' financial statements with its own.

3. Affiliated groups are required to file consolidated tax returns. A disadvantage of the affiliated group designation is that it prevents larger companies from splitting into smaller ones for the purposes of allocating more of their income to lower tax brackets or avoiding the alternative minimum tax.

How to use Affiliated group in a sentence?

1. An affiliated group is two or more corporations that are related through common ownership but are treated as one for federal income tax purposes.
2. Affiliated groups are required to file consolidated tax returns.
3. An advantage is that companies within the group can use their ordinary losses to offset each other's ordinary income.