Answer:
The adjusted tax loss of the group is $11000
Find detailed computation in the attached spreadsheet.
Explanation:
The the tax loss of the of parent company X needs to be adjusted for inter-company dividends of $10000.By eliminating the dividends,the loss becomes $130,000.
On other hand,the profit of company Y needs to be adjusted as well for 70% dividends-received deduction,by eliminating 70% of $30000 dividends received, which amounts to $21000.
By deducting the $21000 from $140000 taxable income,taxable income drops to $119000.
On aggregation, the adjusted tax loss of parent and adjusted taxable income of subsidiary gives $11000 tax loss.
