Wilmington, Inc

question 100

Multiple Choice

Wilmington, Inc., a Pennsylvania corporation, manufactures computer components that it sells to Seine Corporation, a French company, for assembly into finished products. Wilmington owns 90% of Seine's stock. Wilmington's cost per component is $5, its selling price per component is $16, and it sold 110,000 components to Seine this year. Wilmington's taxable income as reported on its Form 1120 was $2,400,000, and Seine's taxable income as reported on its French corporate income tax return was $1,750,000. Determine the effect on the taxable incomes of both corporations if the IRS determines that an arm's length transfer price per component is $23.

• A) Taxable income of both corporations will increase by $770,000.
• B) Taxable income of both corporations will decrease by $770,000.
• C) Wilmington's taxable income will increase by $770,000. Seine's taxable income does not change.
• D) Wilmington's taxable income will decrease by $770,000 and Seine's taxable income will decrease by $770,000.

---

Definitions:

Wide Range

Referring to a broad spectrum or variety of something, from one end to another.

Gender

A social construct that encompasses a range of identities, expressions, and roles associated with being male, female, or non-binary, going beyond biological differences.

Job Crafting

The process by which employees proactively modify their jobs in ways that can improve their work experience and performance.

Job Autonomy

Refers to the degree to which a position allows an employee to make decisions about scheduling, procedures, and the methodology used in completing work tasks.