Tower Company owns 85% of Hill Company. The two companies engaged in several intra-entity transactions. Each company's operating and dividend income for the current time period follow, as well as the effects of unrealized gains. No income tax accruals have been recognized within these totals. The tax rate for each company is 30%.

Tower Co. Hill Co.

Operating income 200,000 80,000

Net unrealized gains 25,000 10,000

Dividends income for hill 10,200

Dividends paid 15,000 12,000

Under the separate return method, how much income tax expense will be assigned to Hill?

A.

$24,000.

B.

$22,857.

C.

$24,874.

D.

$21,874.

E.

$21,000.