The Parent Consolidated Group Reports the Following Results for the Tax

question 164

Essay

The Parent consolidated group reports the following results for the tax year. Determine each member's share of the consolidated tax liability, assuming that the members all have consented to use the relative tax liability tax-sharing method. Dollar amounts are listed in millions, and a 35% marginal income tax rate applies to all of the entities. $\begin{array}{|c|c|c|c|c|c|}\hline &\text { Parent } & \text { Subone } & \text { SubTwo } & \text { SubThree } & \text { Consolidated } \\\hline \text { Ordinary income } & \$ 600 & \$ 200 & \$ 60 & (\$ 30) & \$ 830 \\\hline \text { Capital gain/loss } & -0- & -0- & 20 & \text { (5) } & 15 \\\hline \$ 1231 \text { gain/loss } & \underline{130} & -0- & (55) & -0] & \underline{75} \\\hline \begin{array}{l}\text { Separate taxable } \\\text { incomes }\end{array} & \$ 730 & \$ 200 & \$ 25 & \begin{array}{c}(\$ 30) \text { with a } \$ 5 \\\text { capital loss } \\\text { carryover }\end{array} & \\\hline \text {Consolidated}\\\text {taxable income}&&&&&\$920\\\hline \text {Consolidated tax}\\\text {liability}&&&&&\$322\\\hline \text {Energy tax credit}\\\text {from SubOne}&&&&&(10)\\\hline \text {Net tax due}&&&&&\$312\\\hline \end{array}$

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Definitions:

Control Limits

Boundaries that define the range of acceptable variation in a process.

Centerline

In the context of statistical process control, it refers to the midpoint or average of the data on a control chart, used to assess process stability.

Assembly Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product efficiently.

Control Limits

Thresholds set in quality control processes beyond which a process is considered to be out of control.