What are the tax consequences to service and to blue

Reference no: EM13131134

Service, Inc., an exempt organization, owns all of the stock of Blue, Inc., a retailer of boating supplies. Blue remits all of its profits to Service. According to a policy adopted by service's board, 60% of the amount received from Blue is to be spent annually in carrying out Service's tax-exempt mission, and 40% is to be invested in Service's endowment fund.
a. What are the tax consequences to Service and to Blue?
b. Would your answer in (a) change if 100% of the amount received from Blue was spent annually in carrying out Service's tax-exempt mission?

Reference no: EM13131134

Questions Cloud

What was bachman direct labor rate variance : Timmer Bachman founded the Bachman Corporation over 25 years ago. The company's genesis was the unique climbing apparatus developed by Timmer, an avid mountaineer.

Probability that none of lines experiences a surface finish : Galvanizing lines that are assumed to operate independently. What is the probability that none of the lines experiences a surface finish problem in 40 hours of operation.

Formal report instruction : In this assignment, students will analyze two possible career choices of their choosing, and then write a formal analytical report effectively presenting a recommendation to pursue one of the careers. This project has two parts.

Importance communication and rapidly developing technology : Assume you are a supervisor who manages more than 20 employees, each of whom occupies a different job. At a recent project meeting with eight of your employees, you discussed with them the importance of communication and the rapidly developing te..

What are the tax consequences to service and to blue : Would your answer in (a) change if 100% of the amount received from Blue was spent annually in carrying out Service's tax-exempt mission.

How to evaluate this statement : The IRS can impose intermediate sanctions on a public charity if its gross unrelated business income exceeds 50% of its gross income, or if less than two-thirds of its net unrelated business income is used in carrying out its tax-exempt mission. ..

Prepare the journal entry to recognize the impairment : Cairo corporation has municipal bonds classified as available for sale at December 31, 2012. These bonds have a par value of $800,000, an amortized cost of $800,000, and a fair value of $740,000.

Ethical and legal obligations of the profession of nursing : read about the Ethical and Legal obligations of the profession of nursing.

Means to words that communicate well : Explain what it means to choose “words that communicate well,” and then list four techniques for selecting the best words when writing business messages, providing one example for each technique

User Account

All Pages