Andrews Corporation owns all of the outstanding stock of Zeta Inc.The two corporations do not file a consolidated income tax return.This year,each corporation recorded $200,000 of taxable income.What is the regular tax liability of each corporation?
A)$68,000
B)$61,250
C)$122,500
D)$136,000

Question

Quizplus · Accepted Answer

Since the two corporations do not file a consolidated income tax return, they will each be taxed separately on their taxable income. Assuming they are both C corporations, the regular tax rate for taxable income of $200,000 is 34%. Therefore, the regular tax liability for each corporation would be $68,000 (34% of $200,000).

Andrews Corporation Owns All of the Outstanding Stock of Zeta