The parent consolidated group reports the following results for the tax year. De

Question

The parent consolidated group reports the following results for the tax year. Determine each member's share of the consolidated tax liability, assuming that the members all have consented to use the relative tax liability tax-sharing method. Dollar amounts are listed in millions, and a 35% marginal income tax rate applies.

                                                            Parent                   SubOne                            SubTwo              SubThree          Consolidated

Ordinary Income                                  $700                    100                                      60                       (30)                        $830

Capital Gain/loss                                    0                           0                                        20                         (5)                           15

1231 gain/loss                                      130                        0                                       (55)                      0                                75

Sepearate Taxable income                $830                     $100                                 $25                      ($30) with $5 Cap.

                                                                                                                                                                                  loss carryover  
Consolidated Taxable Income                                                                                                                                                 $920

Consolidtated tax liability                                                                                                                                                           $322

Energy tax credit, from Subone                                                                                                                                                    (10)

Next tax due                                                                                                                                                                                  $312

Explanation / Answer

Hi,

Please find the answer as follows:

Notes:

Allocated Tax Due = Allocation Rate*Net Tax Due.

Thanks.

Separate Taxable Income Seperate Tax Liability Allocation Rate Allocated Tax Due Parent 830 290.5 0.895913647 280 SubOne 100 25 0.077101002 24 SubTwo 25 8.75 0.026985351 8 SubThree 0 0 0 0 Total 955 324.25 1 312

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