a wholly owned subsidiary of Trumaine Corporation, generated a $$\mathrm{}800,000$ 

 

taxable loss in its first year of operations. Trues activities and sales are restricted to State A$,$

 

 which imposes an $\mathrm{}9\%$ income tax. 

 

 In the same year, Trumaines taxable income is $$1,\mathrm{}500,000.$ Trumaines activities and sales are 

 

restricted to State B$,$ which imposes an $11\%$ income tax. Both states use a three$-$factor

apportionment formula that equally weights sales, payroll, and property, and both require a

unitary group to file on a combined basis. Sales, payroll, and average property for each

corporation are as follows.

True Corporation Trumaine Corporation Total

 

 Sales $$2,\mathrm{}900,000$ $$\mathrm{}6,000,000$ $$6,\mathrm{}900,000$ 

 

 Property $1,000,0002,500,0003,\mathrm{}800,000$ 

 

 Payroll $500,0001,500,0002,\mathrm{}800,000$ 

 

True and Trumaine have been found to be members of a unitary business.

a$.$ Determine the overall state income tax for the unitary group.

b$.$ Determine aggregate state income tax for the entities as if they were nonunitary.

c$.$ Compare your results, and comment on the desirability of Trues arrangement.

Incorporate this analysis in a letter to Trumaines board of directors. Corporate offices

are located at $1234$ Mulberry Lane, Birmingham, AL $35298.$

Answer rating: 100% (QA)

Answer Trumaine Corporation Board of Directors 1234 Mulberry Lane Birmingham AL 35298 Subject Analysis of Unitary Business Tax Implications Dear Board ... View the full answer