Question: Omar is the sole shareholder of Plum Corporation which has
Omar is the sole shareholder of Plum Corporation, which has annual taxable income of approximately $200,000. Omar formed a new solely owned corporation, Ivory Corporation, and had Plum Corporation transfer one-half of its assets to Ivory Corporation. Because this results in each of the two corporations having approximately $100,000 of taxable income each year, Omar believes it will reduce overall corporate income taxes. Will Omar’s plan work? Discuss.
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