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.

Critically assess the strength of inferences and conclusions.

Understand the application of logical patterns in various contexts.

Appreciate the historical and philosophical significance of logic.

Understand and apply the concept of applying a generalization in logical reasoning.

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Definitions:

Promissory Estoppel

A legal principle preventing a party from retracting a promise made, when the other party has reasonably relied on that promise to their detriment.

Express Contract

An agreement with terms explicitly stated by the parties involved, either orally or in writing.

Contract Status

The current legal state or condition of a contract, including whether it is active, pending, or terminated.

Illegal Services

Services that are prohibited by law, such as those that involve criminal activities or violate regulations.