Exam 8: Consolidated Tax Returns

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?

Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

Identify which of the following statements is false.

Identify which of the following statements is false.

Identify which of the following statements is false.

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 true.

Identify which of the following statements is true.

A consolidated NOL carryover is $52,000 at the beginning the year.Twenty-five percent of the loss is allocable to Duke Corporation.Duke Corporation leaves the group in the middle of the affiliated group's tax year.Before Duke's departure,it had earnings of $15,000 for the year,and the remainder of the affiliated group earned a total of $25,000,or $40,000 of taxable income for the group,excluding any NOL carryover.Following its departure from the affiliated group,Duke earned $8,000 in its first separate return.How much of the $52,000 NOL can Duke use on its first separate return?

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,

What issues determine whether an affiliated group exists?

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

An advantage of filing a consolidated return is that losses of one affiliated group member may be offset against the taxable income of other group members in the same tax year.

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 this year (August 22)for $130,000 to a corporation that was not a member of the affiliated group.The $130,000 purchase price is to be collected in five equal,annual installments,commencing with the current year's sale date.What gains and losses are recognized,deferred,or restored by Gee and Wilkers Corporations?

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.

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 this year.Zipper Corporation filed separate returns previously.Pants,Skirt,and Zipper filed a consolidated return for the current year and reported the following taxable incomes: The $9,000 consolidated NOL reported in the current year

The election to file a consolidated return is made annually.

What are the differences between a controlled group and an affiliated group?

Which of the following statements is incorrect with respect to the consolidated alternative minimum tax?