On Jan 1, 2014 John acquired 80 percent of Mary stock for $432. At the moment of
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On Jan 1, 2014 John acquired 80 percent of Mary stock for $432. At the moment of Mary acquisition, price paid was equal to fair value of Mary’s net assets. John and Mary are an affiliated group entitled to 100 percent dividend tax exemption. The corporate tax rate is 30% percent. Mary paid dividends of $20 during 2014. There were $40 in intercompany sales from John to Mary, and $10 unrealized profits at the end of 2014. John and Mary pre-tax income statements for 2014 were as follows:
| John's Sales | 900 |
| John's COGS | (500) |
| John's Expenses | (250) --------------- |
| John's Pre-tax income | = 150 |
| Mary's Sales | 500 |
| Mary's COGS | (350) |
| Mary's Expenses | (100) --------------- |
| Mary's Pre-tax income | = 50 |
If the companies prepare consolidated tax returns, what is John's and Mary's tax payable?
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