Question
The MaMa consolidated group reports the following results for the tax year. Determine each members share of the consolidated tax liability, assuming that the members
The MaMa consolidated group reports the following results for the tax year. Determine each members share of the consolidated tax liability, assuming that the members all have consented to use the relative taxable income tax-sharing method. Dollar amounts are listed in millions, and a 35% marginal income tax rate applies to all of the entities.
|
| MaMaCo | SisOne | SisTwo | SisThree | Consolidated |
| Ordinary income | $600 | $200 | $ 60 | ($30) | $830 |
| Capital gain/loss | 0 | 0 | 20 | (5) | 15 |
| 1231 gain/loss | 130 | 0 | (55) | 0 | 75 |
| Separate taxable incomes | $730 | $200 | $ 25 | ($30), with a $5 capital loss carryover |
|
| Consolidated taxable income |
|
|
|
| $920 |
| Consolidated tax liability |
|
|
|
| $322 |
| Energy tax credit, from SubOne |
|
|
|
| (10) |
| Net tax due |
|
|
|
| $312 |
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