Garrison holds a controlling interest in Robertson€™s outstanding stock. For the current year, the following information has been gathered about these two companies:

Garrison uses the cost method to account for the investment in Robertson. Garrison€™s operating income figure does not include dividend income for the current year.
a. Assume that Garrison owns 80 percent of Robertson€™s voting stock. On a consolidated tax return, what amount of income tax is paid?
b. Assume that Garrison owns 80 percent of Robertson€™s voting stock. On separate tax returns, what total amount of income tax is paid?
c. Assume that Garrison owns 70 percent of Robertson€™s voting stock. What total amount of income tax expense does a consolidated income statement recognize?
d. Assume that Garrison holds 60 percent of Robertson€™s voting stock. On a separate income tax return, what amount of income tax does Garrison have topay?

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Garrison 300,000 Robertson 200,000 Operating income (includes a $50,000 net unrealized gain on an intra-entity transfer) Dividends paid Tax rate.. 32,000 50,000 40% 40%