• Login
  • Register
  • PRO
    • PRO Compliance plan
    • PRO Compliance
    • PRO subscription plans
    • Curated articles
    • In-depth
    • Market intelligence
    • Practice guides
    • PRO Reports New
    • Lexology GTDT
    • Ask Lexy
  • PRO
  • Latest
  • GTDT
  • Research
  • Learn
  • Experts
  • Store
  • Blog
  • Events
  • Popular
  • Influencers
  • About
  • Explore
  • Legal Research
  • Primary SourcesBeta
  • PRO Compliance

Introducing PRO Compliance
The essential resource for in-house professionals

  • Compare
  • Topics
  • Interviews
  • Guides
Getting The Deal Through joins Lexology
GTDT and Lexology Navigator have merged

CONTENT DEVELOPMENT

Become your target audience’s go-to resource for today’s hottest topics.

  • Trending Topics New
  • Discover Content
  • Horizons Beta
  • Ideation

CLIENT INTELLIGENCE

Understand your clients’ strategies and the most pressing issues they are facing.

  • Track Sectors
  • Track Clients
  • Mandates New
  • Discover Companies
  • Reports Centre New

COMPETITOR INTELLIGENCE

Keep a step ahead of your key competitors and benchmark against them.

  • Benchmarking
  • Competitor Mandates New

Lexology PRO

Power up your legal research with modern workflow tools, AI conceptual search and premium content sets that leverage Lexology's archive of 900,000+ articles contributed by the world's leading law firms. 

PRO Compliance plan
PRO subscription plans

Premium content

  • Curated articles
  • In-depth
  • Market intelligence
  • Practice guides
  • PRO Reports New

Analysis tools

  • Lexology GTDT
  • Ask Lexy
Explore all PRO content PRO Compliance
  • Find experts
  • About
  • Firms
Introducing Instruct Counsel
The next generation search tool for finding the right lawyer for you.
Back Forward
  • Save & file
  • View original
  • Forward
  • Share
    • Facebook
    • Twitter
    • Linked In
  • Follow
    Please login to follow content.
  • Like
  • Instruct

add to folder:

  • My saved (default)
  • Read later
Folders shared with you

Register now for your free, tailored, daily legal newsfeed service.

Questions? Please contact [email protected]

Register

Use of formula clauses for income tax advantage

White & Case LLP

To view this article you need a PDF viewer such as Adobe Reader. Download Adobe Acrobat Reader

USA August 26 2013
In early 1985, Nestlé Holdings Inc. (Nestlé US), a first-tier wholly owned subsidiary of Nestlé S.A. (Nestlé Switzerland), acquired Carnation Co. and made an election under section 338 for that acquisition.1 Under section 338, Nestlé US would obtain a step-up in the tax basis of Carnation’s assets.2 Nestlé US retained an appraisal firm, which valued Carnation’s intangible assets at $425,630,700, and on April 30, 1985, Nestlé US sold those intangible assets to Nestlé Switzerland for that amount. The IRS disputed Nestlé US’s valuation of the intangible assets acquired from Carnation and asserted that the correct value was much lower. Ultimately, the Tax Court held that the correct value of the Carnation intangible assets was $219,482,000, and this was held to be Nestlé US’s tax basis in the assets after the section 338 election. But recall, Nestlé US had sold the assets to Nestlé Switzerland for $425,630,700. Thus, the Tax Court concluded that Nestlé US had realized a taxable gain of $206,148,700. The Second Circuit disagreed with the Tax Court’s valuation method and remanded the case on that ground, but it agreed that Nestlé US had realized a taxable gain based on the difference between $425,630,700 and the fair market value of the Carnation intangible assets.
White & Case LLP - J. William Dantzler
Back Forward
  • Save & file
  • View original
  • Forward
  • Share
    • Facebook
    • Twitter
    • Linked In
  • Follow
    Please login to follow content.
  • Like
  • Instruct

add to folder:

  • My saved (default)
  • Read later
Folders shared with you

Filed under

  • USA
  • Corporate Finance/M&A
  • Litigation
  • Tax
  • White & Case LLP

Tagged with

  • Intangible asset
  • Subsidiary

Popular articles from this firm

  1. Summary of FERC Meeting Agenda for January 2021 *
  2. LIBOR and the transition to SOFR: the multiple options to transition *
  3. Corporate Boards Must Ask Key Cybersecurity Questions *
  4. Primer: What Companies in the COVID-19 Vaccine Supply Chain Need to Know about the Defense Production Act *
  5. If “builder” baskets grow and “grower” baskets build, what is the difference and are either of these a “scalable” basket? *

If you would like to learn how Lexology can drive your content marketing strategy forward, please email [email protected].

Powered by Lexology
loading...

Related topic hubs

  1. USA
  2. Corporate Finance/M&A
  3. Tax

Related USA articles

  1. Class action challenges Nestlé’s immunity claims for breakfast drink *
  2. Nestlé Continues Medical Industry Expansion *
  3. Candy bar wars part II Nestlé wins battle to protect unique shape of KitKat bars *

Related international articles

  1. Trademark royalties: the French tax administration does not demonstrate the existence of an indirect transfer of profits abroad * - France
  2. Trademark royalties: French tax administration fails to prove indirect transfer of profits abroad * - France
  3. Coffee capsule dispute in Switzerland returned to lower court * - Switzerland
Gee Yung Loong
Senior Director
McAfee Inc
What our clients say

"I think it is a great service, continue the good work."

Back to Top
  • Terms of use
  • Cookies
  • Disclaimer
  • Privacy policy
  • GDPR compliance
  • RSS feeds
  • Contact
  • Submissions
  • About
  • Login
  • Register
  • Follow on Twitter
  • Search
Law Business Research

© Copyright 2006 - 2021 Law Business Research