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My US based C Corporation majority ownership interest in Mauritius company. If that entity suffers a write down do i reflect it on US books?

Michael Losch's Profile

The write down was approx. 50% taking the entity value from approx. $2.7M to $1.4M.

Answers

Topic Expert
Marc Schwartz
Title: Partner
Company: Schwartz International
(Partner, Schwartz International) |

Michael:
What is the reason for the write down? I am not an auditor, but my first question would relate to whether you are using equity versus cost method of accounting and how your "Investment in Sub" account typically moves in years where there is not a write down. Presumably you're on the equity method. If the circumstances leading to the write down generated a local country loss, I might expect to see that reduce your investment value.

For tax purposes, much would depend on how the entity is treated for U.S. tax (corporation, disregarded entity, partnership), whether any anti-deferral rules applied and whether any earnings were repatriated.

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