Question
OWB Inc. and Owin Inc. are owned by the same family. OWB's marginal tax rate is 30%, and Owin's marginal tax rate is 21%. OWB
OWB Inc. and Owin Inc. are owned by the same family. OWB's marginal tax rate is 30%, and Owin's marginal tax rate is 21%. OWB has the opportunity to engage in a transaction that will generate $250,000 taxable cash flow. Alternatively, Owin could engage in the transaction. However, Owin would incur an extra $60,000 deductible cash expense with respect to the transaction. Which of the following statements istrue?
Group of answer choices
A. Because OWB and Owin are owned by the same family, the family is indifferent as to which corporation engages in the transaction.
B. OWB should engage in the transaction to generate $24,900 more after-tax cash flow.
C. OWB should engage in the transaction to avoid the extra expense.
D. Owin should engage in the transaction because it has the lower marginal tax rate.
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