River Co Owned 80% of Boat Inc

Multiple Choice

River Co. owned 80% of Boat Inc. The two companies filed a consolidated income tax return and River used the initial value method to account for the investment. The following information was available from the two companies' financial statements: Operating income included net unrealized gains, which are associated with transfers of inventories between the two companies, but it did not include dividends received from a subsidiary. The income tax rate was 30%.
-What was the amount of income tax expense that should have been assigned to Boat using the separate return method?

A) $36,000
B) $31,500
C) $33,390
D) $32,750
E) $32,660