a wholly owned subsidiary of Trumaine Corporation, generated a $ 80 0 , 0 0 0
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Question:
a wholly owned subsidiary of Trumaine Corporation, generated a $
taxable loss in its first year of operations. Trues activities and sales are restricted to State A
which imposes an income tax.
In the same year, Trumaines taxable income is $ Trumaines activities and sales are
restricted to State B which imposes an income tax. Both states use a threefactor
apportionment formula that equally weights sales, payroll, and property, and both require a
unitary group to file on a combined basis. Sales, payroll, and average property for each
corporation are as follows.
True Corporation Trumaine Corporation Total
Sales $ $ $
Property
Payroll
True and Trumaine have been found to be members of a unitary business.
a Determine the overall state income tax for the unitary group.
b Determine aggregate state income tax for the entities as if they were nonunitary.
c Compare your results, and comment on the desirability of Trues arrangement.
Incorporate this analysis in a letter to Trumaines board of directors. Corporate offices
are located at Mulberry Lane, Birmingham, AL
Related Book For
South Western Federal Taxation 2016 Corporations Partnerships Estates And Trusts
ISBN: 9781305399884
39th Edition
Authors: James Boyd, William Hoffman, Raabe, David Maloney, Young
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