Pratt Company Structured an Income-Generating Transaction So That the $750,000

question 11

Multiple Choice

Pratt Company structured an income-generating transaction so that the $750,000 income and cash flow shifted to Pratt's wholly owned subsidiary, PTB Company. If Pratt's marginal tax rate is 21%, and PTB's tax rate is 10%, compute the tax savings from the income shift.

• A) $157,500
• B) $75,000
• C) $82,500
• D) $78,750

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