My client owns several related entities that all own real estate.
One entity, the parent, is purchasing everything for another subsidiary entity, and it all will be capitalized as improvements on the books of the subsidiary entity.
The sub entity getting all the free improvements has no money or activity of its own, so all vendor bills have the name of the parent entity on them.
Usually i setup is an intercompany account between the two, showing the sub owes the parent,
but client does not want it, as he has too many of these already, as the bank will complain about it,
so it appears there is no relation between the two entities on the books.
Will there be a problem in case of an audit? Will the sub be allowed to book all these improvements ?