ParentCo's separate taxable income was $200,000,and SubCo's was $50,000.Consolidated taxable income before contributions was $125,000.Charitable contributions made by the affiliated group included $5,000 by ParentCo and $1,000 by SubCo.Compute the group's maximum charitable contribution deduction.

Question

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The affiliated group's maximum charitable contribution deduction is limited to 10% of consolidated taxable income before contributions, which in this case would be $12,500 ($125,000 x 10%). Since the group's total charitable contributions were $6,000 ($5,000 by ParentCo and $1,000 by SubCo), they would be able to deduct the full amount without exceeding the 10% limit.

ParentCo's Separate Taxable Income Was $200,000,and SubCo's Was $50,000