Atom Ventures Incorporated (AV) owns stock in the Primo and Faraday corporations. The following summarizes information relating to AV's investment in Primo and Faraday as follows:
Assuming that AV follows the general rules for reporting its income from these investments and the value of AV's stock investments in Primo and Faraday is equal to AV's basis in these investments, what is the amount of AV's book-tax difference associated with the investment in these corporations (disregarding the dividends received deduction)? Is it favorable or unfavorable? Is it permanent or temporary?
Definitions:
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