Which strategy can a taxpayer use to mitigate the negative tax effects of the unitary theory?

In the context of mitigating the negative tax effects stemming from the unitary theory, the ability to utilize both acquiring a profitable entity and affiliating with a service division showing an operating loss becomes clear. The unitary theory aims to assess the income of a unitary group as a whole, which can lead to unfavorable tax liabilities due to the aggregation of profits and losses across the entities.

Acquiring a profitable entity can strategically enhance the overall profitability of the unitary group. When income from this profitable entity is integrated, it can help offset the losses from other affiliates, leading to a more favorable tax landscape. By increasing the aggregate income, the taxpayer can reduce the overall tax burden faced under the unitary system.

Similarly, by affiliating with a service division that is showing an operating loss, a taxpayer can utilize those losses to offset income within the unitary group. This approach can effectively reduce the taxable income and lower tax liabilities. The losses can be highly valuable when considered in conjunction with the overall income of the group.

Therefore, both strategies combined provide a comprehensive approach to mitigating the adverse tax implications of the unitary theory, illustrating the effectiveness of using both profitable acquisitions and loss-affiliated divisions strategically within a taxpayer's overall tax strategy.