Question 1

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 2

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 return. Taxable Income
  How much of the Subsidiary loss can be carried back to last year?

Accepted Answer

A) $0 
B) $1,000 
C) $10,000 
D) none of the above 
A) $0 
B) $1,000 
C) $10,000 
D) none of the above

Question 3

Identify which of the following statements is true.

Accepted Answer

A) The corporate AMT is determined on a separate return basis and then consolidated. 
B) All corporations filing consolidated tax returns are subject to the AMT. 
C) Alternative minimum tax payments from prior consolidated return years that are attributable to timing or permanent differences can be carried over by the affiliated group and claimed as a credit on current or future consolidated returns. 
D) All of the above are false. 
A) The corporate AMT is determined on a separate return basis and then consolidated. 
B) All corporations filing consolidated tax returns are subject to the AMT. 
C) Alternative minimum tax payments from prior consolidated return years that are attributable to timing or permanent differences can be carried over by the affiliated group and claimed as a credit on current or future consolidated returns. 
D) All of the above are false.

Question 4

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 $7,500 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 $5,500 from a less-than-20%-owned corporation.The consolidated dividends-received deduction is what?

Accepted Answer

The answer of Parent and Subsidiary Corporations are members of...

Question 5

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 6

What is the carryback and carryforward rule for consolidated NOLs?

Accepted Answer

A consolidated NOL may be carr

Question 7

Identify which of the following statements is true.

Accepted Answer

A) An affiliated group member incurring an NOL in a separate return year that is available as a carryback or carryforward to a consolidated return year is subject to a limit on the use of the NOL when the loss year is designated a separate return limitation year (SRLY). 
B) A consolidated NOL may be carried back one year and carried forward twenty years. 
C) An NOL incurred in a separate return limitation year by the corporation that is the common parent corporation for the group in the carryover year is subject to the SRLY limitation. 
D) All of the above are false. 
A) An affiliated group member incurring an NOL in a separate return year that is available as a carryback or carryforward to a consolidated return year is subject to a limit on the use of the NOL when the loss year is designated a separate return limitation year (SRLY). 
B) A consolidated NOL may be carried back one year and carried forward twenty years. 
C) An NOL incurred in a separate return limitation year by the corporation that is the common parent corporation for the group in the carryover year is subject to the SRLY limitation. 
D) All of the above are false.

Question 8

Make adjustments to each group member's taxable income for certain intercompany transactions,inventory adjustments,dividends received,excess loss (negative investment basis)accounts,and built-in deductions.

Accepted Answer

To make adjustments to each group member

Question 9

P-S is an affiliated group that files a consolidated tax return.For the current year,P has separate taxable income of $350,000 and S's separate taxable loss is $150,000.The group can take a tentative $50,000 consolidated general business credit.If the group's regular tax liability is $61,250 and their tentative minimum tax liability is $34,500,what is their general business credit limitation? The only difference between their taxable income and AMTI is the statutory exemption.

Accepted Answer

@#IMG-DLM& 
Minus: the greater of
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The

Question 10

Penish and Sagen Corporations have filed consolidated tax returns for several calendar years.At the close of business on September 30,2012,Penish Corporation sells all of its Sagen stock to June.What are the tax consequences to each corporation?

Accepted Answer

All of Penish's income is included in th

Question 11

All of the stock of Hartz and Ryder Corporations is owned by Morgen.Hartz Corporation has been reporting $150,000 of taxable income for each of the past five years.Ryder Corporation has been reporting $30,000 in NOLs for the same period,which totals $150,000.Approximately one-third of Hartz's profits come from sales to Ryder.Intercompany sales between Hartz and Ryder have increased during each of the last five years.What tax issues should Morgen consider with respect to his investments in Hartz and Ryder Corporations?

Accepted Answer

• What advantages would accrue if the Ha

Question 12

Parent Corporation purchases a machine (a five-year property)for $20,000.It claims $4,000 of depreciation under the MACRS rules in the first year it owns the property.At the close of business on the last day of the first year,Parent sells the machine to a 100%-owned corporation (Subsidiary)for $18,000.Subsidiary immediately commences depreciating the machine as a five-year property using the regular MACRS rules.
What gain is reported by Parent Corporation in the first year that Subsidiary Corporation depreciates the machine?

Accepted Answer

The restored gain equals the depreciatio

Question 13

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?

Accepted Answer

Since Toby owns more than 80% of the sto

Question 14

Parent Corporation sells land (a capital asset)to Subsidiary Corporation in an intercompany transaction,realizing a $25,000 gain.Subsidiary uses the land for five years in its trade or business before selling the land to a nonmember of the group in a cash sale in which a $50,000 gain is realized.Which statement is correct?

Accepted Answer

A) A $25,000 capital gain is included in consolidated taxable income when Parent sells the land to Subsidiary Corporation.A $50,000 Sec.1231 gain is included in consolidated taxable income when Subsidiary sells the land. 
B) A $25,000 capital gain and a $50,000 Sec.1231 gain are included in consolidated taxable income when Subsidiary sells the land. 
C) A $75,000 Sec.1231 gain ($25,000 from Parent and $50,000 from Subsidiary)is included in consolidated taxable income in the year Subsidiary sells the land (assuming no recapture of previously deducted Sec.1231 losses must occur). 
D) None of the above are correct. 
A) A $25,000 capital gain is included in consolidated taxable income when Parent sells the land to Subsidiary Corporation.A $50,000 Sec.1231 gain is included in consolidated taxable income when Subsidiary sells the land. 
B) A $25,000 capital gain and a $50,000 Sec.1231 gain are included in consolidated taxable income when Subsidiary sells the land. 
C) A $75,000 Sec.1231 gain ($25,000 from Parent and $50,000 from Subsidiary)is included in consolidated taxable income in the year Subsidiary sells the land (assuming no recapture of previously deducted Sec.1231 losses must occur). 
D) None of the above are correct.

Question 15

Identify which of the following statements is true.

Accepted Answer

A) To be part of an affiliated group,a corporation must be at least 80% directly owned by another group member. 
B) Only common stock is considered when determining if the 80% ownership test is met for affiliated group eligibility. 
C) An affiliated group electing to file a consolidated return may be composed of as few as two corporations. 
D) All of the above are false. 
A) To be part of an affiliated group,a corporation must be at least 80% directly owned by another group member. 
B) Only common stock is considered when determining if the 80% ownership test is met for affiliated group eligibility. 
C) An affiliated group electing to file a consolidated return may be composed of as few as two corporations. 
D) All of the above are false.

Question 16

Identify which of the following statements is true.

Accepted Answer

A) The basic dividends-received deduction rules generally do not apply to the calculation of the consolidated dividends-received deduction. 
B) A member of an affiliated group can elect to carry back its own separate return losses from a consolidated return year to one of its earlier profitable separate return years. 
C) A consolidated NOL is computed in part by including the consolidated capital gain in taxable income. 
D) All of the above are false. 
A) The basic dividends-received deduction rules generally do not apply to the calculation of the consolidated dividends-received deduction. 
B) A member of an affiliated group can elect to carry back its own separate return losses from a consolidated return year to one of its earlier profitable separate return years. 
C) A consolidated NOL is computed in part by including the consolidated capital gain in taxable income. 
D) All of the above are false.

Question 17

Define intercompany transactions and explain the two types of transactions.

Accepted Answer

An intercompany transaction takes place

Question 18

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

Accepted Answer

The effect of having a loss ta

Question 19

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

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 8: Consolidated Tax Returns

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

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 return. Taxable Income How much of the Subsidiary loss can be carried back to last year?

Identify which of the following statements is true.

Which of the following statements is true?

What is the carryback and carryforward rule for consolidated NOLs?

Identify which of the following statements is true.

Make adjustments to each group member's taxable income for certain intercompany transactions,inventory adjustments,dividends received,excess loss (negative investment basis)accounts,and built-in deductions.

Penish and Sagen Corporations have filed consolidated tax returns for several calendar years.At the close of business on September 30,2012,Penish Corporation sells all of its Sagen stock to June.What are the tax consequences to each corporation?

Identify which of the following statements is true.

Identify which of the following statements is true.

Define intercompany transactions and explain the two types of transactions.

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

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

Tax Research

Corporate Formations and Capital Structure

the Corporate Income Tax

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Other Corporate Tax Levies

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Corporate Acquisitions and Reorganizations

Partnership Formation and Operation

Special Partnership Issues

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Administrative Procedures

Ustaxation of Foreign-Related Transactions

An Introduction to Taxation

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Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

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