Exam 8: Consolidated Tax Returns

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?

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.

Identify which of the following statements is false.

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 Cardinal's income will be included in the consolidated return? (Assume all months have 30 days.)

Toby Corporation owns 85% of James Corporation's single class of stock and 35% of Mony Corporation's single class of stock. James Corporation owns 45% of Mony's stock. The remainder of James and Mony's stock is owned by 80 individual shareholders. Are the corporations part of an affiliated group, and can they elect to file a consolidated tax return?

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. How much of the 2018 Zebco NOL be used to offset CTI in 2019?

Identify which of the following statements is true.

Define intercompany transactions and explain the two types of transactions.

Explain the requirements a group of corporations must meet in order to elect to file a consolidated return.

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 false.

Parent and Subsidiary Corporations form an affiliated group. In 2019, the initial year of operation, Parent and Subsidiary filed separate returns. In 2020, the group files a consolidated tax return. The results for 2019 and 2020 are: Taxable Income How much of Subsidiary's loss can be carried back to last year?

Identify which of the following statements is true.

Parent and Subsidiary Corporations have filed calendar-year consolidated tax returns for several years. Parent Corporation uses the cash method of accounting while Subsidiary Corporation uses the accrual method of accounting. If Parent lends Subsidiary money

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

The election to file a consolidated return is made annually.

What is the consequence of having losses subject to the SRLY limitations?

Parent and Subsidiary Corporations are members of an affiliated group. Their separate taxable incomes (before taking into account any dividends)are $75,000 and $85,000, respectively. Subsidiary Corporation receives a dividend from a less-than-20%-owned corporation of $8,000 and from an affiliated 100%-owned nonconsolidated insurance subsidiary of $40,000. Subsidiary distributes a dividend of $35,000 to Parent Corporation who also receives dividends of $6,000 from a less-than-20%-owned corporation. The consolidated dividends-received deduction is what?