Parent and Junior Form a Unitary Group of Corporations

question 110

Multiple Choice

Parent and Junior form a unitary group of corporations. Parent is located in a state with an effective tax rate of 3%, while Junior's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should:

• A) Execute an intercompany loan, such that Junior pays deductible interest to Parent.
• B) Have Parent charge Junior an annual management fee.
• C) Shift Parent's high-cost assembly and distribution operations to Junior.
• D) All of the above are effective income-shifting techniques for a unitary group.
• E) None of the above is an effective income-shifting technique for a unitary group.

Grasp the elasticity concept and its impact on the tax incidence.

Comprehend the principles behind different tax structures (progressive, regressive, and proportional) and their implications on equity and efficiency.

Interpret how taxes influence market outcomes, including deadweight loss and changes to consumer and producer surplus.

Differentiate among the various principles guiding taxation policies, such as the benefits principle and the ability-to-pay principle.

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Definitions:

1967

A year marked by significant global events, including the Six-Day War and the continued Vietnam War.

Gender-Job Paradox

The phenomenon where women and men are distributed unevenly across different occupations and sectors, often affecting gender wage gaps and career advancement opportunities.

Intrinsic Rewards

Satisfaction derived from the activity itself rather than from any external rewards, such as enjoyment and fulfillment from performing a task.

Extrinsic Rewards

Benefits provided by an external source as motivation for performing a specific task, such as money, praise, or awards.