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D. ILU,VOU ParentCo owned 100% of SubCo for the entire year, and both co 100% of SubCo for the entire year, and both companie
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Answer #1

Parent Co's separate taxable income = $100,000

Sub Co's separate taxable income = $75,000

Given that Parent co. owned 100% of Sub Co. and  the inter company transactions have been included in the above.

Therefore, the excess income from inter co. transactions have to be removed from the same for calculating consolidated taxable income for the year.

Hence consolidated taxable income for the year = 100,000 + 75,000 + 20,000 - 40,000

= $155,000

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