A taxpayer wishing to reduce the negative tax effects of the application of the unitary theory might:

Question

Quizplus · Accepted Answer

A taxpayer can reduce the negative tax effects of the unitary theory by affiliating with a service division that shows an operating loss or by disengaging from unitary operations with the most profitable affiliates. By doing so, the taxpayer can reduce their overall income and, therefore, lower their tax liability. Choosing both options (a and b) would be the best strategy to minimize the negative tax effects of the unitary theory. Adding a profitable entity to the unitary group (option c) would have the opposite effect and increase the taxpayer's income, resulting in higher taxes.

A Taxpayer Wishing to Reduce the Negative Tax Effects of the Application