Oscar Corporation generated $1 million of taxable income. Oscar’s activities and sales are restricted to State P, which imposes a 10% income tax. 100% of the stock of Oscar is owned by Felix Corporation. Felix’s income for the taxable period is $1.5 million. Felix’s activities and sales are restricted to State Q, which imposes a 5% income tax. Both states use a three-factor apportionment formula that equally weights sales, payroll, and property. The apportionment information for both companies is as follows:

	Oscar (all State P)	Felix (all State Q)
Sales	$3,000,000	$7,000,000
Property	$2,000,000	3,500,000
Payroll	2,500,000	4,500,000

Assume States P & Q both require that unitary groups file combined reports. Based on their relationship, Oscar and Felix could argue they are unitary or they could argue they are not unitary. (Either argument has merit.) Assume that both states define “unitary” the same way—such that if Oscar and Felix are unitary, they must file combined returns in both states. [That is, they can’t file combined in P and separate in Q or vice versa; they must file separate in both states or combined in both states.]

True or False: Based on the above numbers (and assuming similar operations continue in the future), Oscar and Felix should argue they are engaged in the same unitary business.