Pretax Operating Incomes of Panitz Corporation and Its 80%-Owned Subsidiary,Salazar

question 34

Essay

Pretax operating incomes of Panitz Corporation and its 80%-owned subsidiary,Salazar Corporation,for the year 2014,are shown below.
Panitz and Salazar belong to an affiliated group.Salazar pays total dividends of $35,000 for the year.There are no unamortized book value/fair value differentials relating to Panitz's investment in Salazar.During the year,Panitz sold land to Salazar at a total loss of $15,000 which is included in its pretax operating income.Salazar still 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 Panitz and Salazar as if they had filed separate tax returns.
2.Determine Panitz's net income from Salazar.

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Definitions:

Customer Base

The group of customers who repeatedly purchase the goods or services of a business, serving as the main source of revenue for the company.

Intellectual Capital

The intangible assets of a business, including human knowledge, relationships, and organizational processes, that contribute to its competitive edge.

Business Assets

Business assets are resources owned by a company that are expected to provide future economic benefits, including tangible assets like property and equipment, as well as intangible assets such as patents and trademarks.

Personalized Services

Tailored services that are adapted to meet the individual needs or preferences of customers, often used to enhance customer satisfaction and loyalty.