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

Question

Quizplus · Accepted Answer

Affiliating with a service division that shows an operating loss, like research and development, can help reduce the negative tax effects of the application of the unitary theory, as the losses from the service division can offset the profits from other divisions within the unitary group. Acquiring a unitary affiliate in a country with a high wage structure may not necessarily help reduce the negative tax effects of the unitary theory, as the higher wages may lead to higher taxation in that country. Adding a profitable entity to the unitary group may also not be the best choice, as it may increase the overall profits of the unitary group, leading to higher taxes.

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