Parent and Junior Form a Non-Unitary Group of Corporations

question 107

Multiple Choice

Parent and Junior form a non-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 non-unitary group.
• E)None of the above is an effective income-shifting technique for a non-unitary group.

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Definitions:

Society

A group of individuals involved in persistent social interaction, or a large social grouping sharing the same geographical or social territory, typically subject to the same political authority and dominant cultural expectations.

Hypothetical Proposition

A statement in logic that suggests a conditional relationship between two propositions, where one is the consequence of the other.

Disjunctive Proposition

A logical statement that proposes an either/or scenario, where only one of the conditions needs to be true.

Categorical Proposition

A statement that affirms or denies something unconditionally, often structured in standardized forms.