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.

Understand the impact of managerial decisions on a firm's inventory and cash management.

Analyze how various financial activities affect a firm's cash flow.

Understand the components and significance of the cash cycle in business operations.

Recognize the effects of accounts payable and receivable on a company's liquidity.

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Definitions:

Decline Stage

The final phase in the product life cycle, characterized by a decrease in sales and often leading to the discontinuation of the product.

Multichannel Retailers

Retailers that utilize multiple sales channels, such as brick-and-mortar stores, online websites, and catalogs, to reach customers.

Nonstore Formats

Retail operations that do not involve a traditional, physical store setting, such as online shopping, catalog shopping, and direct selling.

Retail Life Cycle

The progression of stages that a retail business goes through, from introduction to growth, maturity, and decline.