Exam 8: Consolidated Tax Returns

Ajax and Brindel Corporations have filed consolidated returns for several calendar years. Ajax acquires land for $60,000 on January 1 of last year. On September 1 of this year, Ajax sells the land to Brindel for $90,000. The basis and holding period for the land acquired by Brindel are:

A consolidated return's tax liability is owed by

The IRS can attempt to collect taxes owed on a consolidated return from any of the members of the consolidated group.

Diana Corporation owns stock of Tomika Corporation. For Diana and Tomika to qualify for the filing of consolidated returns, at least what percentage of Tomika's total voting power and total value of stock must be directly owned by Diana?

Key and Glass Corporations were organized in 2018. They became an affiliated group and filed separate tax returns. In 2019, the corporations begin filing a consolidated tax return. Key and Glass report the following results: Which of the following statements is not correct?

Parent and Subsidiary Corporations have filed calendar-year consolidated tax returns for several years. Parent Corporation uses the cash method of accounting while Subsidiary Corporation uses the accrual method of accounting. If Parent lends Subsidiary money

Parent Corporation owns all of the stock of Richards and Smith Corporations on January 1. The three corporations have filed consolidated tax returns for a number of calendar years. Parent sells all of the stock of Richards Corporation on June 1. Parent purchases all of the stock of Taylor Corporation on September 1. Parent sells all of the stock of Smith Corporation on November 1. When does the affiliated group terminate?

Pants and Skirt Corporations are affiliated and have filed consolidated tax returns for the past three years. Pants acquires 100% of Zipper stock on January 1 of 2019. Zipper Corporation filed separate returns previously. Pants, Skirt, and Zipper filed a consolidated return for 2019 and reported the following taxable incomes: How much of the 2018 Zipper NOL be used to offset CTI in 2019?

Define intercompany transactions and explain the two types of transactions.

Identify which of the following statements is true.

Identify which of the following statements is false.

Brother-sister controlled groups can elect to file a consolidated tax return.

Gee Corporation purchased land from an unrelated corporation several years ago for $105,000. The land was used by Gee as a storage lot for company trucks. Gee sold the land to Wilkers, its 85%-owned subsidiary corporation, last year (July 3) for $115,000. The land was also used in Wilkers' trade or business. Wilkers Corporation sold the land this year (August 22) for $130,000 to a corporation that was not a member of the affiliated group. The $130,000 purchase price is to be collected in five equal, annual installments, commencing with the current year's sale date. What gains and losses are recognized, deferred, or restored by Gee and Wilkers Corporations?

Toby Corporation owns 85% of James Corporation's single class of stock and 35% of Mony Corporation's single class of stock. James Corporation owns 45% of Mony's stock. The remainder of James and Mony's stock is owned by 80 individual shareholders. Are the corporations part of an affiliated group, and can they elect to file a consolidated tax return?

The Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is

Identify which of the following statements is true.

Which of the following corporations is entitled to join in a consolidated tax return without making a special election?

Identify which of the following statements is false.

Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

Identify which of the following statements is true.