2. Pop Corporation, whose effective income tax rate is 34 percent, received $400,000 dividends from its 30

Question:

2. Pop Corporation, whose effective income tax rate is 34 percent, received $400,000 dividends from its 30 percent–

owned domestic equity investee during the current year and recorded $1,000,000 equity in the investee’s income.

Pop’s income tax expense for the year should include taxes on the investment of:

a $27,200 b $40,800 c $68,000 d $136,000

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