40. Peter Inc., a Kentucky corporation, owns 100 percent of Suvi Inc., a Mississippi corporation. Peter and Suvi file a consolidated federal tax return. Peter has income tax nexus in Kentucky and South Carolina; Suvi has income tax nexus in Mississippi and South Carolina.

Kentucky, Mississippi, and South Carolina are separatereturn states. In which states must Pete and Suvi file tax returns? Can they file a consolidated return in any states? Explain. (Hint: Use South Carolina Form SC 1120 and the related instructions.)