Question

885,000 income generated by the contract be taxed to company G because it per the services se lt performed On7 B Plk and OPK inc. are owned by the same fan BPK's marginal tax rate is 21% and OPK's margra tax rate is 32%0. BPIL is about to incur a $72,000 deduchble expense that would benefit both com Ipanies. OPK could obtain the same mutual benefit by incurring as 82,500 deductible expense. Khich corporation should incur the expense?

Answer 1

BPK after tax cost will be & $72000 (1-21%) - $ 56880 OPK aftee teex cost will be $8250 0 C1-32%) $ 56100 Hence, OPK should incur the expense to minimise ifs offee taux cost