Question 1

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

Accepted Answer

A) True 
 B)False

Question 2

Mako and Snufco Corporations are affiliated and have filed consolidated returns for the first time in 2019. Mako acquired 100% of Zebco stock on January 1 of 2019, the date of Zebco's formation. Mako, Snufco, and Zebco, report the following taxable incomes for 2018 and 2019. $$\begin{array} { | c | c | c | } 
\hline \text { Corporation } & \text { Taxable Income } & \text { Taxable Income } \
& \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 9 } \
\hline \text { Mako } & \$ 18,000 & \$ 12,000 \
\text { Snufco } & 9,000 & 8,000 \
\text { Zebco } & ( 25,000 ) & 15,000 \
\hline
\end{array}$$ How much of the 2018 Zebco NOL be used to offset CTI in 2019?

Accepted Answer

A)  $0 
B)  $12,000 
C)  $15,000 
D)  $20,000 
A)  $0 
B)  $12,000 
C)  $15,000 
D)  $20,000

Question 3

Parent Corporation purchases a machine (a five- year property) for $20,000. It claims $4,000 of depreciation under the MACRS rules in the first year it owns the property. At the close of business on the last day of the first year, Parent sells the machine to a 100%- owned corporation (Subsidiary) for $18,000. Subsidiary immediately commences depreciating the machine as a five- year property using the regular MACRS rules. What depreciation can be claimed by Subsidiary Corporation in the first year it uses the machine?

Accepted Answer

The basis of the machine to Parent on th

Question 4

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 5

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

Accepted Answer

A)  closely held corporations 
B)  corporations exempt from tax under Sec. 501 
C)  real estate investment trusts 
D)  foreign corporations 
A)  closely held corporations 
B)  corporations exempt from tax under Sec. 501 
C)  real estate investment trusts 
D)  foreign corporations

Question 6

Identify which of the following statements is true.

Accepted Answer

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

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  When a new corporation joins an affiliated group, all of its income and expense items for the tax year, including the acquisition date, must be allocated between the separate tax return and consolidated tax return that are to be filed based on the number of days included in each of the two tax years. 
B)  All members of a consolidated group must use the same tax year. 
C)  A consolidated return election may be revoked after 5 years. 
D)  All of the above are false. 
A)  When a new corporation joins an affiliated group, all of its income and expense items for the tax year, including the acquisition date, must be allocated between the separate tax return and consolidated tax return that are to be filed based on the number of days included in each of the two tax years. 
B)  All members of a consolidated group must use the same tax year. 
C)  A consolidated return election may be revoked after 5 years. 
D)  All of the above are false.

Question 8

Blair and Cannon Corporations are members of an affiliated group. No prior net Sec. 1231 losses have been reported by any group member. The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows. $$\begin{array} { | c | c | c | c | } 
\hline \text { Corporation } & \text { STCG/STCL } & \text { LTCG/LTCL } & \begin{array} { c } 
\text { Sec.1231 } \
\text { Gains and Losses }
\end{array} \
\hline \text { Blair } & ( \$ 5,000 ) & \$ 6,000 & \$ 3,000 \
\text { Cannon } & 6,000 & ( 7,000 ) & ( 3,000 ) \
\hline
\end{array}$$ Which of the following statements is correct?

Accepted Answer

A)  The consolidated group reports a net short- term capital gain of $1,000. 
B)  Cannon Corporation's separate return reports a $1,000 net long- term capital loss. 
C)  Blair Corporation's separate return reports a $4,000 net long- term capital gain. 
D)  All three of the above are correct. 
A)  The consolidated group reports a net short- term capital gain of $1,000. 
B)  Cannon Corporation's separate return reports a $1,000 net long- term capital loss. 
C)  Blair Corporation's separate return reports a $4,000 net long- term capital gain. 
D)  All three of the above are correct.

Question 9

P and S are members of an affiliated group that has filed consolidated tax returns for a number of years. The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.

Accepted Answer

A) True 
 B)False

Question 10

What issues determine whether an affiliated group exists?

Accepted Answer

In determining whether an affiliated gro

Question 11

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:
$\begin{array}{|l|c|c|}\hline\text { Consolidated } & \begin{array}{c}
\text { Income (loss) } \
\mathbf{2 0 1 8}
\end{array} & \begin{array}{c}
\text { Income (loss) } \
\mathbf{2 0 1 9}
\end{array} \
\hline \text { Key } & (\$ 30,000) & \$ 50,000 \
\text { Glass } & 10,000 & (35,000) \
\hline
\end{array}$ Which of the following statements is not correct?

Accepted Answer

A)  Key's last year NOL cannot offset this year's consolidated taxable income. 
B)  Key's current year income must first be offset by Glass's current year loss. 
C)  Key's last year NOL cannot offset Glass's last year profits. 
D)  All of the above are correct. 
A)  Key's last year NOL cannot offset this year's consolidated taxable income. 
B)  Key's current year income must first be offset by Glass's current year loss. 
C)  Key's last year NOL cannot offset Glass's last year profits. 
D)  All of the above are correct.

Question 12

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?

Accepted Answer

A)  November 1 
B)  September 1 
C)  June 1 
D)  The original affiliated group does not terminate. 
A)  November 1 
B)  September 1 
C)  June 1 
D)  The original affiliated group does not terminate.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Identify which of the following statements is true.

Accepted Answer

A)  Permission to discontinue the filing of consolidated tax returns is sometimes granted by the IRS. 
B)  Corporations that join in a consolidated return must adopt the same tax year as the parent corporation. 
C)  Additional administrative costs may be incurred when filing a consolidated tax return. 
D)  All of the above are true. 
A)  Permission to discontinue the filing of consolidated tax returns is sometimes granted by the IRS. 
B)  Corporations that join in a consolidated return must adopt the same tax year as the parent corporation. 
C)  Additional administrative costs may be incurred when filing a consolidated tax return. 
D)  All of the above are true.

Question 15

A consolidated 2018 NOL carryover is $36,000 at the beginning of 2019 is exists. Of the 2018 NOL, 25% of the loss is allocable to Duke Corporation. Duke Corporation leaves the group in the middle of the affiliated group's tax year. Before Duke's departure, it had earnings of $15,000 for the year, and the remainder of the affiliated group earned a total of $25,000, or $40,000 of taxable income for the group, excluding any NOL carryover. Following its departure from the affiliated group, Duke earned $8,000 in its first separate return. How much of the $36,000 NOL can Duke use on its first separate return?

Accepted Answer

@#IMG-DLM& 2018 NOL 36,000 - $32,000 lim

Question 16

What are the differences between a controlled group and an affiliated group?

Accepted Answer

Three forms of controlled groups are per

Question 17

Identify which of the following statements is false.

Accepted Answer

A)  The basis to the purchasing member of property acquired in an intercompany transaction is the amount of cash paid to the selling member. 
B)  In general, buyers and sellers engaging in an intercompany transaction are treated as separate entities. 
C)  The holding period for property acquired in an intercompany transaction begins when the corresponding item is reported. 
D)  Inventory sales between group members are an example of an intercompany transaction. 
A)  The basis to the purchasing member of property acquired in an intercompany transaction is the amount of cash paid to the selling member. 
B)  In general, buyers and sellers engaging in an intercompany transaction are treated as separate entities. 
C)  The holding period for property acquired in an intercompany transaction begins when the corresponding item is reported. 
D)  Inventory sales between group members are an example of an intercompany transaction.

Question 18

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

Accepted Answer

A)  intercompany sale 
B)  undistributed subsidiary earnings 
C)  intercompany dividends 
D)  None of the above items create temporary differences. 
A)  intercompany sale 
B)  undistributed subsidiary earnings 
C)  intercompany dividends 
D)  None of the above items create temporary differences.

Question 19

Penish and Sagen Corporations have filed consolidated tax returns for several calendar years. At the close of business on September 30, 2018, Penish Corporation sells all of its Sagen stock to June. What are the tax consequences to each corporation?

Accepted Answer

All of Penish's income is included in th

Question 20

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

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

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 true.

Identify which of the following statements is true.

P and S are members of an affiliated group that has filed consolidated tax returns for a number of years. The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.

What issues determine whether an affiliated group exists?

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

Identify which of the following statements is true.

What are the differences between a controlled group and an affiliated group?

Identify which of the following statements is false.

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

Penish and Sagen Corporations have filed consolidated tax returns for several calendar years. At the close of business on September 30, 2018, Penish Corporation sells all of its Sagen stock to June. What are the tax consequences to each 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

U.S. Taxation of Foreign-Related Transactions

Filters

Exam 8: Consolidated Tax Returns

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

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 true.

Identify which of the following statements is true.

P and S are members of an affiliated group that has filed consolidated tax returns for a number of years. The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.

What issues determine whether an affiliated group exists?

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

Identify which of the following statements is true.

What are the differences between a controlled group and an affiliated group?

Identify which of the following statements is false.

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

Penish and Sagen Corporations have filed consolidated tax returns for several calendar years. At the close of business on September 30, 2018, Penish Corporation sells all of its Sagen stock to June. What are the tax consequences to each 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

U.S. Taxation of Foreign-Related Transactions

Filters