I have an interesting scenario:
Domain A was worked on by a disreputable SEO company off shore. The owner of Domain A came to me for my assistance and evaluation on how the off shore company was doing. I concluded that he should terminate the relationship immediately. One of the bad things they did was register Domain A with a LOT of link farms.
I started working on a new site that eventually we decided to go with Domain B (a better, but totally related domain name to Domain A). I added a nice new site and had my client write clean, relevant information for it. We've done all legitimate, above ground by-google's-recommendation SEO for Domain B.
I have a series of 301 redirects from Domain A to Domain B. Since April 24th, organic search results have plummeted. I see many incoming links via Webmaster Tools as the massive link farms, but those link farms have Domain A in their databases, not Domain B.
My question: is Domain B inheriting the link juice from Domain A insofar as the incoming links are showing up in Webmaster Tools as directly related to Domain A? Should I sever the ties with Domain A altogether?
Thanks.