Question

Company A and B are members of the same controlled group. Company A is located in Jurisdiction A which levies a 20% tax on income. Company B is located in Jurisdiction B which levies a 30% tax on income. If a transaction is structured such that $100,000 of income is shifted from Company B to Company A, the resulting tax savings is $.

Answer 1

The resulting tax savings when $100,000 of income is shifted from Company B to Company A depends on the tax rates in Jurisdiction A and Jurisdiction B.

Step-by-step explanation:

When a transaction is structured in such a way that $100,000 of income is shifted from Company B to Company A, the resulting tax savings can be calculated by comparing the tax rates in Jurisdiction A and Jurisdiction B.

In Jurisdiction A, the tax rate is 20%, so the tax savings on $100,000 income would be $20,000.

In Jurisdiction B, the tax rate is 30%, so the tax savings on $100,000 income would be $30,000.

Therefore, the resulting tax savings is $20,000 if the income is shifted from Company B to Company A.