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Problem 2 Taxpayer owns 2 separate companies. Company is in the 35% marginal tax bracket and company B is in the 15 %tax bracket. Company

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Problem 2 Taxpayer owns 2 separate companies. Company is in the 35% marginal tax bracket and company B is in the 15 %tax bracket. Company A sells all its output to company B at cost and B sells to outside third parties at a markup of 50%. Company A's revenues total $ 2million while Company B's revenues total $ 3million. Required What are the tax implications of this arrangement to both companies? How would the IRS react to this arrangement

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