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%. Using percentage allocation method, how much income tax expense is assigned to Hill?

A.

$21,000.

B.

$24,000.

C.

$20,400.

D.

$17,400.

E.

$0.

Tower Company Hill Company Operating income (excluding equity or $80,000 10,000 12,000 $200,000 dividend income from Hill) Net unrealized gains (included in operating income above) Dividend income from Hill Dividends paid 25,000 10,200 15,000