Exam 8: Consolidated Tax Returns

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return -Binding nature of election over multiple tax years

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return -Joint and several liability for Federal income tax

JuniorCo sells an asset to SeniorCo at a realized loss. That loss is not recognized by the group in the year of the sale, because of the:

Match each of the following items with the appropriate description, indicating whether the item is computed on a group basis on a consolidated tax return -Compensation deductions

In computing consolidated E & P, dividends paid to the parent by group members are subtracted.

Match each of the following items with the appropriate description, indicating whether the item's treatment for financial accounting and Federal income tax purposes is the same or not -Ownership level of parent at which a subsidiary can join the consolidated group.

ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's consolidated taxable income or loss.

The calendar year Sterling Group files its Federal corporate income tax return on a consolidated basis. The group's Form 1120 is due on March 15, or September 15 if an extended due date is approved by the IRS.

A limited partnership can join the parent's consolidated group for book and for tax purposes.

ParentCo owned 100% of SubCo for the entire year, and both companies use the accrual method of tax accounting. During the year, SubCo purchased $20,000 of supplies from ParentCo. In addition, SubCo provided internal audit services to ParentCo, which were worth $40,000. Including these transactions, ParentCo's separate taxable income was $75,000, and SubCo's separate taxable income was $100,000. What is the group's consolidated taxable income for the year?

Most of the rules governing the use of consolidated returns are found in tax ____________________, and not the ____________________.

When a subsidiary sells to the parent some business-use property that has appreciated from its $20,000 basis to a $50,000 fair market value, the subsidiary immediately recognizes $30,000 ordinary income on the consolidated return.

The right to file on a consolidated basis is available to a group of corporations when they constitute a "parent-subsidiary affiliated group."

A corporation organized in Germany and wholly owned by the U.S. parent can be included in a Federal consolidated return.

In terms of the consolidated return rules, the Radcliffe Charitable Foundation is a(n) ____________________ entity.

ParentCo's separate taxable income was $200,000, and JuniorCo's was $50,000. Consolidated taxable income before contributions was $200,000. Charitable contributions made by the affiliated group included $5,000 by ParentCo and $1,000 by JuniorCo. Compute the group's maximum charitable contribution deduction.

Lacking elections to the contrary, Federal consolidated NOLs are carried back two years and then forward twenty years.

A consolidated Federal income tax return may be the product of a merger of the affiliates, or of a stock-for-assets takeover.

ParentCo's separate taxable income was $200,000, and SubCo's was $50,000. Consolidated taxable income before contributions was $200,000. Charitable contributions made by the affiliated group included $60,000 by ParentCo and $10,000 by SubCo. Compute the group's maximum charitable contribution deduction.

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return -A new affiliate uses the LIFO method for inventories