Exam 8: Consolidated Tax Returns

Subsidiary Corporation purchases a used machine from Parent Corporation in an intercompany transaction. Which of the following events is a corresponding event for the intercompany transaction?

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?

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

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?

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?

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

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.

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

Identify which of the following statements is false.

P and S comprise an affiliated group that filed consolidated returns in 2018, 2019 and 2020. They report the following for 2018, 2019 and 2020. How much of the Subsidiary 2018 loss can be utilized against consolidated net income in 2019?

The election to file a consolidated return is made annually.

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

Identify which of the following statements is true.

A consolidated return's tax liability is owed by

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?

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

Identify which of the following statements is true.

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?

A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.

Blitzer Corporation is the parent corporation of a 10- member group that has filed consolidated tax returns for a number of years. Last year, the group sold all the stock of Wolf Corporation to Jerry Jensen. This year, Wolf Corporation reported a $300,000 NOL. Wolf's taxable income while a group member averaged $200,000 annually for the past five years but is expected to be only $50,000 next year due to start- up costs that will be incurred with the introduction of a new product line. Profits are expected to increase in each succeeding year. What issues should Blitzer have considered when trying to value Wolf's NOL prior to its sale? What tax issues should Wolf now consider when deciding how to use its NOL?