Question 1

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) A consolidated return election may be revoked after 5 years. 
C) All members of a consolidated group must use the same tax year. 
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) A consolidated return election may be revoked after 5 years. 
C) All members of a consolidated group must use the same tax year. 
D) All of the above are false.

Question 2

Which of the following statements is true?

Accepted Answer

A) A consolidated group determines its general business credit on a consolidated basis. 
B) The general business credit can be carried back 3 years and forward 15 years. 
C) The general business credit can be carried forward indefinitely. 
D) The general business credit cannot be carried forward or backward. 
A) A consolidated group determines its general business credit on a consolidated basis. 
B) The general business credit can be carried back 3 years and forward 15 years. 
C) The general business credit can be carried forward indefinitely. 
D) The general business credit cannot be carried forward or backward.

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Identify which of the following statements is true.

Accepted Answer

A) A corporation may be required to file a separate return and file with an affiliated group in the same calendar year. 
B) When a corporation joins in filing a consolidated return, taxable income of the member is combined with other members' taxable income prior to any adjustments. 
C) If a corporation becomes a member of an affiliated group within the first thirty days of the corporation's tax year, the corporation can elect not to file a short-period tax return. 
D) All of the above are false. 
A) A corporation may be required to file a separate return and file with an affiliated group in the same calendar year. 
B) When a corporation joins in filing a consolidated return, taxable income of the member is combined with other members' taxable income prior to any adjustments. 
C) If a corporation becomes a member of an affiliated group within the first thirty days of the corporation's tax year, the corporation can elect not to file a short-period tax return. 
D) All of the above are false.

Question 5

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?

Accepted Answer

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

Question 6

Pants and Skirt Corporations are affiliated and have filed consolidated tax returns for the past three years. Pants acquires 100% of Zipper stock on January 1 of 2019. Zipper Corporation filed separate returns previously. Pants, Skirt, and Zipper filed a consolidated return for 2019 and reported the following taxable incomes:   How much of the 2018 Zipper NOL be used to offset CTI in 2019?

Accepted Answer

A) $20,000 
B) $17,000 
C) $16,000 
D) $0 
A) $20,000 
B) $17,000 
C) $16,000 
D) $0

Question 7

The Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is

Accepted Answer

A) $69,250. 
B) $14,750. 
C) $80,000. 
D) $64,000. 
A) $69,250. 
B) $14,750. 
C) $80,000. 
D) $64,000.

Question 8

What issues determine whether an affiliated group exists?

Accepted Answer

In determining whether an affiliated gro

Question 9

Identify which of the following statements is true.

Accepted Answer

A) A shareholder corporation that receives a nondividend distribution from an affiliated group member is not required to recognize a gain when the distribution amount exceeds the shareholder's basis in the distributing corporation's stock. 
B) The dividends-received deduction limitation for dividends received by members of an affiliated group from nonmembers is applied to the separate taxable income of each group member. 
C) The dividends-received deduction cannot be taken in full on a consolidated return if the deduction amount creates or increases a consolidated NOL. 
D) All of the above are false. 
A) A shareholder corporation that receives a nondividend distribution from an affiliated group member is not required to recognize a gain when the distribution amount exceeds the shareholder's basis in the distributing corporation's stock. 
B) The dividends-received deduction limitation for dividends received by members of an affiliated group from nonmembers is applied to the separate taxable income of each group member. 
C) The dividends-received deduction cannot be taken in full on a consolidated return if the deduction amount creates or increases a consolidated NOL. 
D) All of the above are false.

Question 10

Jackson and Tanker Corporations are members of an affiliated group. The two corporations have been affiliated since they were formed last year. Both corporations have always used a calendar year as their tax year. Tanker, the subsidiary, has a separate return year NOL of $14,000 from last year. Jackson Corporation has a separate return year NOL of $16,000 from last year. Commencing this year, the two corporations filed a consolidated tax return. The NOLs can be carried over

Accepted Answer

A) to a consolidated return year and both are SRLY (separate return limitation year)losses. 
B) to a consolidated return year and Tanker's loss is a SRLY loss. 
C) to a consolidated return year without limit. 
D) to a consolidated return year and Jackson's loss is a SRLY loss. 
A) to a consolidated return year and both are SRLY (separate return limitation year)losses. 
B) to a consolidated return year and Tanker's loss is a SRLY loss. 
C) to a consolidated return year without limit. 
D) to a consolidated return year and Jackson's loss is a SRLY loss.

Question 11

A consolidated return's tax liability is owed by

Accepted Answer

A) all group members in equal portions. 
B) the group member responsible for that portion of the tax liability. 
C) all group members who are severely liable. 
D) the parent corporation. 
A) all group members in equal portions. 
B) the group member responsible for that portion of the tax liability. 
C) all group members who are severely liable. 
D) the parent corporation.

Question 12

An affiliated group elects the use of the consolidated method for filing its tax return by

Accepted Answer

A) filing Form 1120. 
B) filing a consent to the election from each member of the affiliated group in the initial year. 
C) filing an affiliations schedule. 
D) All of the above are necessary for the election. 
A) filing Form 1120. 
B) filing a consent to the election from each member of the affiliated group in the initial year. 
C) filing an affiliations schedule. 
D) All of the above are necessary for the election.

Question 13

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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?

Accepted Answer

A) $7,700 
B) $10,290 
C) $11,000 
D) $49,000 
A) $7,700 
B) $10,290 
C) $11,000 
D) $49,000

Question 16

Ajax and Brindel Corporations have filed consolidated returns for several calendar years. Ajax acquires land for $60,000 on January 1 of last year. On September 1 of this year, Ajax sells the land to Brindel for $90,000. The basis and holding period for the land acquired by Brindel are:

Accepted Answer

A)   
B)   
C)   
D) none of the above 
A)   
B)   
C)   
D) none of the above

Question 17

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?

Accepted Answer

A) the purchasing group member depreciating the machine 
B) the purchasing group member selling the machine for cash to a nonmember of the group 
C) the departure of the purchasing group member from the affiliated group when its stock is sold to a nonmember of the group 
D) All of the above are recognition events. 
A) the purchasing group member depreciating the machine 
B) the purchasing group member selling the machine for cash to a nonmember of the group 
C) the departure of the purchasing group member from the affiliated group when its stock is sold to a nonmember of the group 
D) All of the above are recognition events.

Question 18

The treatment of capital loss carrybacks and carryovers is similar to NOLs.

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

• What alternatives exist for using the

Question 20

Gee Corporation purchased land from an unrelated corporation several years ago for $105,000. The land was used by Gee as a storage lot for company trucks. Gee sold the land to Wilkers, its 85%-owned subsidiary corporation, last year (July 3)for $115,000. The land was also used in Wilkers' trade or business. Wilkers Corporation sold the land for cash this year (August 22)for $130,000 to a corporation that was not a member of the affiliated group. What gains and losses are recognized, deferred, or restored by Gee and Wilkers Corporations?

Accepted Answer

Gee Corporation must report the $10,000

Identify which of the following statements is true.

Which of the following statements is true?

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.

Identify which of the following statements is true.

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 Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is

What issues determine whether an affiliated group exists?

Identify which of the following statements is true.

A consolidated return's tax liability is owed by

An affiliated group elects the use of the consolidated method for filing its tax return by

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

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?

Ajax and Brindel Corporations have filed consolidated returns for several calendar years. Ajax acquires land for $60,000 on January 1 of last year. On September 1 of this year, Ajax sells the land to Brindel for $90,000. The basis and holding period for the land acquired by Brindel are:

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?

The treatment of capital loss carrybacks and carryovers is similar to NOLs.

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

Us Taxation of Foreign-Related Transactions

Filters

Exam 8: Consolidated Tax Returns

Identify which of the following statements is true.

Which of the following statements is true?

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.

Identify which of the following statements is true.

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 Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is

What issues determine whether an affiliated group exists?

Identify which of the following statements is true.

A consolidated return's tax liability is owed by

An affiliated group elects the use of the consolidated method for filing its tax return by

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

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?

Ajax and Brindel Corporations have filed consolidated returns for several calendar years. Ajax acquires land for $60,000 on January 1 of last year. On September 1 of this year, Ajax sells the land to Brindel for $90,000. The basis and holding period for the land acquired by Brindel are:

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?

The treatment of capital loss carrybacks and carryovers is similar to NOLs.

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

Us Taxation of Foreign-Related Transactions

Filters