P, owns all of the only class of S, Inc. Stock, and P and S are in
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P, owns all of the only class of S, Inc. Stock, and P and S are in a consolidated group. During year 1, P performs services for S in exchange for $10,000, and P incurs $8,000 of expenses in performing those services. Assume that S must capitalize its $10,000 cost for the services and takes into account $1,000 of cost recovery deductions in each of years 2 through 11. How will P-S consolidated group be taxed on this transaction?
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