Pretax Operating Incomes of Pang Corporation and Its 70%-Owned Subsidiary,Sala

question 21

Essay

Pretax operating incomes of Pang Corporation and its 70%-owned subsidiary,Sala Corporation,for the year 2014,are shown below.Sala pays total dividends of $60,000 for the year.There are no unamortized book value/fair value differentials relating to Pang's investment in Sala.During the year,Pang sold land to Sala for a gain of $35,000 and Sala holds this land at the end of the year.The marginal corporate tax rate for both corporations is 34%.
Required:
1.Determine the separate amounts of income tax expense for Pang and Sala as if they had filed separate tax returns.
2.Determine Pang's net income from Sala.

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Definitions:

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