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A taxpayer owns two separate companies. Company A is fully taxable at 21% =, and company B has substantial tax loss carryforwards. Company A sells

A taxpayer owns two separate companies. Company A is fully taxable at 21% =, and company B has substantial tax loss carryforwards. Company A sells all its output on B at cost, and B sells to outsiders at a markup of 50%. Company As revenues total $2 million, whereas company Bs revenues total $2 million. What are the tax implications of this arrangement? How will the IRS react? (please show equations)

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