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.

Identify the structural characteristics and functions of specific muscles and muscle groups.

Understand the principles of internal control systems.

Identify the methods of controlling cash receipts and disbursements.

Learn about the safeguards for physical and intangible assets.

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Definitions:

Master Account

A central account that holds funds or securities, often used by institutions to manage multiple sub-accounts.

Available Balance

The amount of funds in a bank account that is accessible for withdrawal or processing of checks or electronic payments, not including any holds, unprocessed transactions, or restrictions.

Cheque Book

A booklet of cheques provided by a bank allowing the account holder to pay others by writing cheques.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically including a balance sheet, income statement, and cash flow statement.