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What are the tax consequences to the subsidiary

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Reference no: EM132650448

Problem - Comfort, Inc., an exempt hospital, is going to operate a pharmacy that will be classified as an unrelated trade or business. Comfort establishes the pharmacy as a wholly owned subsidiary. During the current year, the subsidiary generates taxable income of $280,000 and pays dividends of $200,000 to Comfort.

Required -

a. What are the tax consequences to the subsidiary?

b. What are the tax consequences to Comfort?

Reference no: EM132650448

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