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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