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Corporation A has a marginal tax bracket of 21% it has a wholly owned foreign subsidiary that has a marginal tax bracket of 10%. Company

Corporation A has a marginal tax bracket of 21% it has a wholly owned foreign subsidiary that has a marginal tax bracket of 10%. Company A sells its output to Company B at cost generating $2M in revenues. Company B than sells the output to third parties with a 50% mark up generating $3M in revenues. What are the tax implications of this arrangement? What doctrines might the IRS apply to attack this arrangement?


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