Business, 20.07.2020 01:01 tintinayeir2567
True Corporation, a wholly owned subsidiary of Trumaine Corporation, generated a $400,000 taxable loss in its first year of operations. True's activities and sales are restricted to State A, which imposes an 8% income tax. In the same year, Trumaine's taxable income is $1,000,000. Trumaine's activities and sales are restricted to State B, which imposes an 11% income tax. Both states use a three-factor apportionment formula that equally weights sales, payroll, and property, and both require a unitary group to file on a combined basis. Sales, payroll, and average property for each corporation are as follows:
True Corporation Turmaine Corporation Total
Sales $2500000 $4,000,000 6500,000
Property 1,000,000 25,00,000 35,00,000
Payroll 500,000 1500,000 2,000,000
True and Trumaine have been found to be members of a unitary business.
a. Determine the overall state income tax for the unitary group.
b. Determine aggregate state income tax for the entities if they were non-unitary.
c. Incorporate this analysis in a letter to Trumaine's board of directors. Corporate offices are located at 1234 Mulberry Lane, Birmingham, AL 35298.
Answers: 1
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True Corporation, a wholly owned subsidiary of Trumaine Corporation, generated a $400,000 taxable lo...
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