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:

Psychodynamic Perspective

A theory in psychology that emphasizes unconscious psychological processes and contends that childhood experiences are crucial in shaping adult personality.

Inner Forces

The internal drives, desires, or motivations that guide or influence an individual's behavior and decisions.

Behavioral

Relates to the actions or reactions of an object or organism, usually in response to external stimuli.