Question 1

How are the members of a Federal consolidated group affected by computations related to E & P?

Accepted Answer

A)  Each member keeps its own E & P account. 
B)  E & P is computed solely on a consolidated basis. 
C)  Members' E & P balances are frozen as long as the consolidation election is in place. 
D)  Consolidated E & P is computed as the sum of the E & P balances of each of the group members, computed on the last day of the tax year. 
A)  Each member keeps its own E & P account. 
B)  E & P is computed solely on a consolidated basis. 
C)  Members' E & P balances are frozen as long as the consolidation election is in place. 
D)  Consolidated E & P is computed as the sum of the E & P balances of each of the group members, computed on the last day of the tax year. A

Question 2

ParentCo and SubCo report the following items of income and deduction for the current year. ParentCo's SubCo's Taxable Item Taxable Income Income Income loss) from operations $100,000 $10,000)
§ 1231 loss 5,000)
Capital gain 15,000
Charitable contribution 12,000
Compute ParentCo and SubCo's taxable income or loss computed on a separate basis. Then compute the total of those amounts if appropriate.

Accepted Answer

C

Question 3

Generally, when a subsidiary leaves an ongoing consolidated group, it must wait years before it again can reenter the parent's consolidated group.

Accepted Answer

five
5

Question 4

SubCo sells an asset to ParentCo at a realized gain. While ParentCo still holds the asset, SubCo leaves the consolidated group. As a result:

Accepted Answer

A)  The gain never is recognized. 
B)  SubCo recognizes the gain on its first tax return after leaving the group. 
C)  The group recognizes the gain under the related party rules. 
D)  The group recognizes the gain under the acceleration rule. 
A)  The gain never is recognized. 
B)  SubCo recognizes the gain on its first tax return after leaving the group. 
C)  The group recognizes the gain under the related party rules. 
D)  The group recognizes the gain under the acceleration rule.

Question 5

Outline the major advantages and disadvantages of filing Federal corporate income tax returns on a consolidated basis. Limit your comments to the income tax effects of the election.

Accepted Answer

Assessing only the Federal income tax as

Question 6

After a takeover, the parent's balance sheet shows a fair market value cost basis in the subsidiary for both book and tax purposes.

Accepted Answer

A) True 
 B)False

Question 7

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.

Accepted Answer

A)  $0 
B)  $600 
C)  $6,000 
D)  $20,000 
E)  $25,000 
A)  $0 
B)  $600 
C)  $6,000 
D)  $20,000 
E)  $25,000

Question 8

Consolidated group members each are jointly and severally liable for the entire consolidated Federal income tax liability.

Accepted Answer

A) True 
 B)False

Question 9

The rules can limit the net operating loss deduction claimed on a Federal consolidated return.

Accepted Answer

separate r

Question 10

Within a Federal consolidated income tax group, SubOne can/cannot) use the LIFO
inventory method at the same time that SubTwo uses the FIFO method.

Accepted Answer

The answer of Within a Federal consolidated income tax group,...

Question 11

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.
-Net operating loss.

Accepted Answer

A) Group item 
B) Not a group item 
A) Group item 
B) Not a group item

Question 12

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.

Accepted Answer

A) Group item 
B) Not a group item 
A) Group item 
B) Not a group item

Question 13

In computing consolidated E & P, a negative adjustment is allowed for the group's disallowed entertainment expenditures.

Accepted Answer

A) True 
 B)False

Question 14

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

Accepted Answer

The major filing requirements for a Fede

Question 15

The consolidated tax return regulations use "SRLY" limitations with respect to losses of a subsidiary that can be deducted on the consolidated return. Describe the various SRLY rules that might apply to a consolidated group member's losses.

Accepted Answer

The SRLY l

Question 16

In computing consolidated taxable income, capital gains and losses are removed from the taxable incomes of the group members and determined on a group basis.

Accepted Answer

A) True 
 B)False

Question 17

In computing consolidated taxable income, the purchase at a realized gain of a depreciable asset by Subsidiary from
Parent is an example of an) transaction.

Accepted Answer

The answer of In computing consolidated taxable income, the purchase...

Question 18

A Federal consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss NOL) that is apportioned to Parent.

Accepted Answer

A)  $360,000. 
B)  $400,000. 
C)  $500,000.
$$\begin{array} { l l } 
\text { Parent } & ( \$ 400,000 ) \
\text { Junior } & ( \$ 600,000 ) \
\text { Minor } & \$ 100,000
\end{array}$$ 
D)  $900,000. All NOLs of a consolidated group are apportioned to the parent. 
A)  $360,000. 
B)  $400,000. 
C)  $500,000.
$$\begin{array} { l l } 
\text { Parent } & ( \$ 400,000 ) \
\text { Junior } & ( \$ 600,000 ) \
\text { Minor } & \$ 100,000
\end{array}$$ 
D)  $900,000. All NOLs of a consolidated group are apportioned to the parent.

Question 19

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

Accepted Answer

The initial basis of the subsidiary is r

Question 20

The consolidated return rules are designed to allow a tax-neutral means by which to elect to file on a consolidated basis.

Accepted Answer

A) True 
 B)False

How are the members of a Federal consolidated group affected by computations related to E & P?

Generally, when a subsidiary leaves an ongoing consolidated group, it must wait years before it again can reenter the parent's consolidated group.

SubCo sells an asset to ParentCo at a realized gain. While ParentCo still holds the asset, SubCo leaves the consolidated group. As a result:

Outline the major advantages and disadvantages of filing Federal corporate income tax returns on a consolidated basis. Limit your comments to the income tax effects of the election.

After a takeover, the parent's balance sheet shows a fair market value cost basis in the subsidiary for both book and tax purposes.

Consolidated group members each are jointly and severally liable for the entire consolidated Federal income tax liability.

The rules can limit the net operating loss deduction claimed on a Federal consolidated return.

Within a Federal consolidated income tax group, SubOne can/cannot) use the LIFO inventory method at the same time that SubTwo uses the FIFO method.

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. -Net operating loss.

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, a negative adjustment is allowed for the group's disallowed entertainment expenditures.

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

The consolidated tax return regulations use "SRLY" limitations with respect to losses of a subsidiary that can be deducted on the consolidated return. Describe the various SRLY rules that might apply to a consolidated group member's losses.

In computing consolidated taxable income, capital gains and losses are removed from the taxable incomes of the group members and determined on a group basis.

In computing consolidated taxable income, the purchase at a realized gain of a depreciable asset by Subsidiary from Parent is an example of an) transaction.

A Federal consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss NOL) that is apportioned to Parent.

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

The consolidated return rules are designed to allow a tax-neutral means by which to elect to file on a consolidated basis.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Taxation of International Transactions

Partnerships: Formation, Operations, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 8: Consolidated Tax Returns

How are the members of a Federal consolidated group affected by computations related to E & P?

Generally, when a subsidiary leaves an ongoing consolidated group, it must wait years before it again can reenter the parent's consolidated group.

SubCo sells an asset to ParentCo at a realized gain. While ParentCo still holds the asset, SubCo leaves the consolidated group. As a result:

Outline the major advantages and disadvantages of filing Federal corporate income tax returns on a consolidated basis. Limit your comments to the income tax effects of the election.

After a takeover, the parent's balance sheet shows a fair market value cost basis in the subsidiary for both book and tax purposes.

Consolidated group members each are jointly and severally liable for the entire consolidated Federal income tax liability.

The rules can limit the net operating loss deduction claimed on a Federal consolidated return.

Within a Federal consolidated income tax group, SubOne can/cannot) use the LIFO inventory method at the same time that SubTwo uses the FIFO method.

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. -Net operating loss.

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, a negative adjustment is allowed for the group's disallowed entertainment expenditures.

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

The consolidated tax return regulations use "SRLY" limitations with respect to losses of a subsidiary that can be deducted on the consolidated return. Describe the various SRLY rules that might apply to a consolidated group member's losses.

In computing consolidated taxable income, capital gains and losses are removed from the taxable incomes of the group members and determined on a group basis.

In computing consolidated taxable income, the purchase at a realized gain of a depreciable asset by Subsidiary from Parent is an example of an) transaction.

A Federal consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss NOL) that is apportioned to Parent.

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

The consolidated return rules are designed to allow a tax-neutral means by which to elect to file on a consolidated basis.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Taxation of International Transactions

Partnerships: Formation, Operations, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters