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:

Co-Branding

A marketing strategy that involves the collaboration of two or more brands to create a product or service that leverages the strengths and appeal of both brands.

Generic Branding

A branding strategy that emphasizes the product category rather than a specific brand, often used for products perceived as commodities.

Reseller Licensing

Agreements that grant a business the right to buy products and sell them again, often under the brand name of the original manufacturer.

Mixed Branding

A marketing strategy where a company markets products under both its own brand and under the brand names of other companies.