In 2020, Consolidated Lint Inc. became concerned about an increasingly competitive market for lint. Seeking to diversify and increase corporate earnings, the Company started to invent and build new jet engines for the Air Force at a new location in California. In 2020, the Lint Division had a good year earning $4,000,000 in federal taxable income while the new Jet Engines Division lost $500,000 in federal taxable income. In New York, the Lint Division had apportionment of 40% and the Jet Engines Division had apportionment of 10%. Collectively the two divisions had NY apportionment of 35%

a. In your opinion, are these two business unitary?

b. What tax would Consolidated Lint Inc. owe NY if the two divisions are treated as separate unitary businesses.

c. What tax would Consolidated Lint Inc. owe NY filing as a single unitary business (make a general estimate).

d. Say that in California the Jet Engines Division has apportionment of 100% and the Lint Division has apportionment of 0%. Which is the optimal filing position—one or two unitary businesses?