E 10-12

[Tax] General questions 1. Income taxes are currently due on intercompany profits when:

a Profits originate from upstream sales b Separate-company tax returns are filed c Consolidated tax returns are filed d Affiliates are accounted for as consolidated subsidiaries 2. The right of a consolidated entity to file a consolidated tax return is contingent upon:

a Ownership by a common parent of all the voting stock of group members b Ownership by a common parent of 90% of the voting stock of group members c Classification as an affiliated group d Direct or indirect ownership of a majority of the outstanding stock of all group members 3. When affiliates are classified as an affiliated group for tax purposes, the group:

a Excludes unrealized profits from intercompany transactions from taxable income b Must file a consolidated income tax return c May file separate income tax returns d Pays lower income taxes Subsidiary Preferred Stock, Consolidated Earnings per Share, and Consolidated Income Taxation 373 4. Deferred income taxes are provided for unrealized profits from intercompany transactions when:

a A consolidated tax return is filed b Separate-company tax returns are filed c The unrealized profits are from upstream sales d The consolidated entity is an affiliated group