Ponte Corporation Owns 25 Percent of the Voting Shares of Scala

Multiple Choice

Ponte Corporation owns 25 percent of the voting shares of Scala Corporation.In 20X8,Scala reported net income of $120,000 and paid dividends of $30,000.Ponte uses the equity method to account for this investment.Ponte reported taxable income of $160,000 on its separate operations and has an effective tax rate of 40 percent.There is an 80 percent exemption on intercompany dividends.
-Based on the preceding information,income tax expense for Ponte for the year 20X8 will be:

A) $67,000
B) $64,600
C) $64,000
D) $66,400