Vanderbilt Law Review


James T. O'Hare

First Page



It is a maxim of taxation that where graduated tax rates are imposed on the income of a legal entity, tax avoidance in the form of income splitting will be attempted. This has proven true in the case of individuals' and trusts, and has more recently become true of corporations. For over a decade the law governing the tax status of affiliated corporations has been developing. The Revenue Act of 1964 introduces several important changes in the federal income tax treatment of multiple corporations. The purpose of this note is to examine the tax status of multiple corporations both before and after the 1964 act in order to reach conclusions as to the effect of the changes made by the 1964 act. In addition, proposals of the American Law Institute and Professor Stanley S. Surrey are reviewed as a background to a critique of the present law and proposals for reform.