Question

Comfort, Inc., an exempt hospital, is going to operate a pharmacy that will be classified as an unrelated trade or business. Comfort establishes the pharmacy as a wholly owned subsidiary. During the current year, the subsidiary generates taxable income of $280,000 and pays dividends of $200,000 to Comfort.
a. What are the tax consequences to the subsidiary?
b. What are the tax consequences to Comfort?


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  • CreatedSeptember 09, 2015
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