W Corp.owns 100 percent of the stock of three subsidiaries, X, Y, and Z.W and X have nexus with both States A and B.Y conducts business only in State B.Z is a foreign corporation that conducts no business in the United States.All four corporations comprise part of a unitary business.If combined reporting based on unitary principles is utilized in State A and a water's edge election is made, how many corporations' income and apportionment figures will be taken into account?
A)1
B)2
C)3
D)4
E)None of the above

Question

Quizplus · Accepted Answer

In a water's edge election, only domestic corporations with nexus in the state are included. Therefore, W and X, which have nexus in State A, will be included. Y and Z will not be included as Y has no nexus in State A and Z is a foreign corporation.

W CorpOwns 100 Percent of the Stock of Three Subsidiaries, X