Question 1

Identify which of the following statements is true.

Accepted Answer

A)  When applying the large corporation rules for purposes of determining underpayments, each member of an affiliated group is considered separately. 
B)  The entire consolidated tax liability cannot be collected from one group member. 
C)  Once consolidated tax returns have been filed for two consecutive years, the affiliated group must pay estimated taxes on a consolidated basis. 
D)  All of the above are false. 
A)  When applying the large corporation rules for purposes of determining underpayments, each member of an affiliated group is considered separately. 
B)  The entire consolidated tax liability cannot be collected from one group member. 
C)  Once consolidated tax returns have been filed for two consecutive years, the affiliated group must pay estimated taxes on a consolidated basis. 
D)  All of the above are false.

Question 2

A Canadian subsidiary cannot file as part of the consolidated group with its U.S. parent.

Accepted Answer

A) True 
 B)False

Question 3

Identify which of the following statements is true.

Accepted Answer

A)  A built-in deduction accrues in a separate return year, but is not recognized in a consolidated return year. 
B)  Section 382 adopts a single-entity approach in determining ownership changes. 
C)  The 50-percentage-point minimum stock ownership change that triggers the Sec. 382 loss limitation rules will not occur in acquisitive transactions involving a group of corporations filing consolidated returns. 
D)  All of the above are false. 
A)  A built-in deduction accrues in a separate return year, but is not recognized in a consolidated return year. 
B)  Section 382 adopts a single-entity approach in determining ownership changes. 
C)  The 50-percentage-point minimum stock ownership change that triggers the Sec. 382 loss limitation rules will not occur in acquisitive transactions involving a group of corporations filing consolidated returns. 
D)  All of the above are false.

Question 4

Cardinal and Bluebird Corporations both use a calendar year as their tax year. At the close of business on June 30, Cardinal Corporation buys all of Bluebird Corporation's stock. If the two corporations file a consolidated return and both corporations earn their income evenly throughout the year, what portion of Bluebird's income will be included in the consolidated return? (Assume all months have 30 days.)

Accepted Answer

A)  100% 
B)  50% 
C)  0% 
D)  none of the above 
A)  100% 
B)  50% 
C)  0% 
D)  none of the above

Question 5

What are the five steps in calculating consolidated taxable income?

Accepted Answer

Generally, the five steps are:
1) Comput

Question 6

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year:   What is the affiliated group's consolidated regular tax liability?

Accepted Answer

A)  $7,700 
B)  $10,290 
C)  $11,000 
D)  $49,000 
A)  $7,700 
B)  $10,290 
C)  $11,000 
D)  $49,000

Question 7

Jeffrey Corporation owns 85% of Placer Corporation and 25% of Mercer Corporation. Placer Corporation owns 60% of Mercer Corporation and 45% of Tyson Corporation. Jeffrey Corporation also owns 85% of Apple Corporation and Apple Corporation owns 30% of Tyson Corporation. Which of these corporations are members of an affiliated group if all percentages represent voting power and value held by the respective corporations?

Accepted Answer

Jeffrey Corporation is the parent corpor

Question 8

Which of the following is not reported by an affiliated group on a consolidated basis?

Accepted Answer

A)  capital gain 
B)  section 1231 gain 
C)  casualty & theft gain 
D)  All of the above are included. 
A)  capital gain 
B)  section 1231 gain 
C)  casualty & theft gain 
D)  All of the above are included.

Question 9

Apple Corporation and Banana Corporation file consolidated returns. In January 2017, Apple sold Banana property with a basis of $120,000 for its fair value of $150,000. Banana sold the property to an unrelated party in April 2018 for $200,000. What amount of gain should be reported for these transactions in the consolidated returns for 2017 and 2018?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 10

Toby owns all of the single class of stock of James and Mony Corporations. James Corporation owns all of Volt Corporation's stock. Mony owns all of Wegnin Corporation. Mony and Wegnin Corporations are foreign corporations. Toby, James, and Volt are domestic corporations. Are the corporations part of an affiliated group?

Accepted Answer

Toby, James, and Volt constitu

Question 11

Jackson and Tanker Corporations are members of an affiliated group. The two corporations have been affiliated since they were formed last year. Both corporations have always used a calendar year as their tax year. Tanker, the subsidiary, has a separate return year NOL of $14,000 from last year. Jackson Corporation has a separate return year NOL of $16,000 from last year. Commencing this year, the two corporations filed a consolidated tax return. The NOLs can be carried over

Accepted Answer

A)  to a consolidated return year and both are SRLY (separate return limitation year) losses. 
B)  to a consolidated return year and Tanker's loss is a SRLY loss. 
C)  to a consolidated return year without limit. 
D)  to a consolidated return year and Jackson's loss is a SRLY loss. 
A)  to a consolidated return year and both are SRLY (separate return limitation year) losses. 
B)  to a consolidated return year and Tanker's loss is a SRLY loss. 
C)  to a consolidated return year without limit. 
D)  to a consolidated return year and Jackson's loss is a SRLY loss.

Question 12

The election to file a consolidated return is made annually.

Accepted Answer

A) True 
 B)False

Question 13

Mariano owns all of Alpha Corporation, which owns 100% of Beta Corporation's single class of stock. On January 1, Alpha and Beta Corporations report a consolidated NOL carryover from prior years. What is the maximum percentage of Alpha Corporation's single class of stock that Mariano can sell to a single shareholder without triggering the Sec. 382 loss limitation?

Accepted Answer

A)  0% 
B)  50% 
C)  75% 
D)  80% 
A)  0% 
B)  50% 
C)  75% 
D)  80%

Question 14

Jason and Jon Corporations are members of an affiliated group whose taxable incomes (before dividends) are $90,000 and $100,000, respectively. Jason Corporation owns all of the Jon stock. Jon Corporation received a dividend from a less-than-20%-owned corporation of $10,000 and $25,000 from a 100%-owned nonconsolidated insurance company. Jon Corporation distributed a $40,000 dividend to Jason Corporation. Jason Corporation also received dividends from a 25%-owned corporation of $20,000. The consolidated dividends-received deduction for federal income tax purposes is what?

Accepted Answer

[(0.50 × $10,000) + (0.65 × $2

Question 15

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year:   The affiliated group's consolidated taxable income is

Accepted Answer

A)  $40,000. 
B)  $49,000. 
C)  $51,000. 
D)  $52,000. 
A)  $40,000. 
B)  $49,000. 
C)  $51,000. 
D)  $52,000.

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  To be part of an affiliated group, a corporation must be at least 80% directly owned by another group member. 
B)  Only common stock is considered when determining if the 80% ownership test is met for affiliated group eligibility. 
C)  An affiliated group electing to file a consolidated return may be composed of as few as two corporations. 
D)  All of the above are false. 
A)  To be part of an affiliated group, a corporation must be at least 80% directly owned by another group member. 
B)  Only common stock is considered when determining if the 80% ownership test is met for affiliated group eligibility. 
C)  An affiliated group electing to file a consolidated return may be composed of as few as two corporations. 
D)  All of the above are false.

Question 17

What issues determine whether an affiliated group exists?

Accepted Answer

In determining whether an affiliated gro

Question 18

Parent Corporation sells land (a capital asset) to Subsidiary Corporation in an intercompany transaction, recognizing a $25,000 gain. Subsidiary holds the land as an investment for five years before selling the land to a nonmember of the group on an installment basis in a sale in which a $50,000 gain is realized. The sales proceeds are collectible in four equal installments with an appropriate interest amount being charged to the purchaser. Which statement is correct?

Accepted Answer

A)  A $25,000 capital gain is included in consolidated taxable income when Parent sells the land to Subsidiary Corporation. A $50,000 capital gain is included in consolidated taxable income when Subsidiary sells the land. 
B)  A $25,000 capital gain from Parent and a $50,000 capital gain from Subsidiary are included in consolidated taxable income when Subsidiary sells the land. 
C)  The $25,000 capital gain from Parent and $50,000 capital gain from Subsidiary are included ratably in consolidated taxable income, commencing in the year the first installment is received. 
D)  None of the above are correct. 
A)  A $25,000 capital gain is included in consolidated taxable income when Parent sells the land to Subsidiary Corporation. A $50,000 capital gain is included in consolidated taxable income when Subsidiary sells the land. 
B)  A $25,000 capital gain from Parent and a $50,000 capital gain from Subsidiary are included in consolidated taxable income when Subsidiary sells the land. 
C)  The $25,000 capital gain from Parent and $50,000 capital gain from Subsidiary are included ratably in consolidated taxable income, commencing in the year the first installment is received. 
D)  None of the above are correct.

Question 19

Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

Accepted Answer

A)  accrual of rentals on a lease of real property owned by one group member that is used by another group member; both group members use the accrual method of accounting 
B)  cash dividend payment from a subsidiary corporation to its parent corporation 
C)  sale of inventory from a subsidiary corporation to its parent corporation 
D)  None of the above transactions require the deferral and later recognition of income. 
A)  accrual of rentals on a lease of real property owned by one group member that is used by another group member; both group members use the accrual method of accounting 
B)  cash dividend payment from a subsidiary corporation to its parent corporation 
C)  sale of inventory from a subsidiary corporation to its parent corporation 
D)  None of the above transactions require the deferral and later recognition of income.

Question 20

Ajak Corporation owns 85% of the single class of Utech Corporation stock. Utech Corporation owns 35% of Tech Corporation. Ajak Corporation also owns 50% of Tech Corporation, and Tech Corporation owns 75% of Baxter Corporation.

Accepted Answer

A)  Ajak, Tech, Utech, and Baxter Corporations are an affiliated group. 
B)  Ajak, Tech, and Baxter Corporations are an affiliated group. 
C)  Ajak, Tech, and Utech Corporations are an affiliated group. 
D)  None of the above are correct. 
A)  Ajak, Tech, Utech, and Baxter Corporations are an affiliated group. 
B)  Ajak, Tech, and Baxter Corporations are an affiliated group. 
C)  Ajak, Tech, and Utech Corporations are an affiliated group. 
D)  None of the above are correct.

Identify which of the following statements is true.

A Canadian subsidiary cannot file as part of the consolidated group with its U.S. parent.

Identify which of the following statements is true.

What are the five steps in calculating consolidated taxable income?

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year: What is the affiliated group's consolidated regular tax liability?

Which of the following is not reported by an affiliated group on a consolidated basis?

The election to file a consolidated return is made annually.

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year: The affiliated group's consolidated taxable income is

Identify which of the following statements is true.

What issues determine whether an affiliated group exists?

Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

Ajak Corporation owns 85% of the single class of Utech Corporation stock. Utech Corporation owns 35% of Tech Corporation. Ajak Corporation also owns 50% of Tech Corporation, and Tech Corporation owns 75% of Baxter Corporation.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters

Exam 8: Consolidated Tax Returns

Identify which of the following statements is true.

A Canadian subsidiary cannot file as part of the consolidated group with its U.S. parent.

Identify which of the following statements is true.

What are the five steps in calculating consolidated taxable income?

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year: What is the affiliated group's consolidated regular tax liability?

Which of the following is not reported by an affiliated group on a consolidated basis?

The election to file a consolidated return is made annually.

Boxcar Corporation and Sidecar Corporation, an affiliated group, reports the following results for the current year: The affiliated group's consolidated taxable income is

Identify which of the following statements is true.

What issues determine whether an affiliated group exists?

Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

Ajak Corporation owns 85% of the single class of Utech Corporation stock. Utech Corporation owns 35% of Tech Corporation. Ajak Corporation also owns 50% of Tech Corporation, and Tech Corporation owns 75% of Baxter Corporation.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters