Consolidated Lint Inc. is organized in Delaware with headquarters in New York. The Company had federal taxable income of $600,000 in 2020 after deducting $100,000 of New York taxes. In 2019 Consolidated Lint Inc. sold $100,000 of lint to New York customers and shipped $3,000,000 to all customers around the world. New York has single sales factor apportionment. New York has rolling conformity with the Internal Revenue Code.

1. Say that Consolidated Lint Inc. decided that instead of diversifying into jet engines, it decided to stick with what it knew and developed a line of stuffed animals which it sold to stores. 70 percent of the Companys lint production was utilized by the Toy Division to fill in the stuffed animals. Is it likely or not likely that these to divisions constitute a single unitary business?

2. In 2019, the Treasury unit of Consolidated Lint (located at its Company headquarters at 40 Wall Street) purchased 1 percent of the outstanding stock of Augo Inc., a gold mining company listed on the New York Stock Exchange. In 2013, the stock is sold for a $100,000 profit. Can Connecticut (assuming Consolidated Lint has lint business nexus in CT) tax the gain on stock?

1. Can Connecticut require Consolidated Lint to allocate interest and other expenses against non-unitary income? Why might it require this?
2. Can Connecticut require Consolidated Lint to allocate all of its interest expense to offset non-unitary income?