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.

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Definitions:

Performance Appraisal

The systematic evaluation of an employee’s job performance and productivity with respect to the established job standards and objectives.

Appraisal Conference

A formal meeting between a manager and an employee to review the employee's performance, set goals, and discuss career progression.

Appraisal Rating

The evaluation or grading given to an employee based on their performance, often influencing promotions, pay raises, or development plans.

Scale Points

Marks or intervals on a scale used for assessment or measurement, such as in salary grades or performance evaluations.