Question 1

To be an affiliated group,the parent corporation must directly own at least 80% of another group member.

Accepted Answer

A) True 
 B)False

Question 2

Jason and Jon Corporations are members of an affiliated group whose taxable incomes (before dividends)are $90,000 and $100,000,respectively.Jason Corporation owns all of the Jon stock.Jon Corporation received a dividend from a less-than-20%-owned corporation of $9,900 and $25,000 from a 100%-owned nonconsolidated insurance company.Jon Corporation distributed a $40,000 dividend to Jason Corporation.Jason Corporation also received dividends from a 25%-owned corporation of $9,500.The consolidated dividends-received deduction for federal income tax purposes is what?

Accepted Answer

[(0.70 × $9,900)+ (0.80 × $9,5

Question 3

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

Accepted Answer

A) A separate alternative minimum taxable income computation is made for each individual group member.These amounts are then totaled to arrive at consolidated alternative minimum taxable income. 
B) Positive adjustments that are made with respect to one group member can be offset by negative adjustments that are made with respect to another group member in computing consolidated alternative minimum taxable income. 
C) The affiliated group's alternative minimum tax payment is available as a credit against its regular tax amount in future tax years. 
D) The estimated tax payment rules apply to the alternative minimum tax. 
A) A separate alternative minimum taxable income computation is made for each individual group member.These amounts are then totaled to arrive at consolidated alternative minimum taxable income. 
B) Positive adjustments that are made with respect to one group member can be offset by negative adjustments that are made with respect to another group member in computing consolidated alternative minimum taxable income. 
C) The affiliated group's alternative minimum tax payment is available as a credit against its regular tax amount in future tax years. 
D) The estimated tax payment rules apply to the alternative minimum tax.

Question 4

What types of corporations are not includible corporations for purposes of determining whether or not an affiliated group exists?

Accepted Answer

Special tax status corporations are not

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

Which of the following is not reported by an affiliated group on a consolidated basis?

Accepted Answer

A) capital gain 
B) section 1231 gain 
C) casualty & theft gain 
D) All of the above are included. 
A) capital gain 
B) section 1231 gain 
C) casualty & theft gain 
D) All of the above are included.

Question 8

A separate return year is a corporation's tax year for which it files a separate tax return or files a consolidated tax return with another affiliated group.

Accepted Answer

A) True 
 B)False

Question 9

How do intercompany transactions affect the calculation of capital gains/losses?

Accepted Answer

Deferred intercompany gains/lo

Question 10

Which of the following corporations is an includible corporation for purposes of filing a consolidated tax return?

Accepted Answer

A) insurance companies 
B) S corporations 
C) car manufacturing corporation 
D) foreign corporations 
A) insurance companies 
B) S corporations 
C) car manufacturing corporation 
D) foreign corporations

Question 11

Which of the following corporations is entitled to join in a consolidated tax return without making a special election?

Accepted Answer

A) corporations exempt from tax under Sec.501 
B) real estate investment trusts 
C) closely held corporations 
D) foreign corporations 
A) corporations exempt from tax under Sec.501 
B) real estate investment trusts 
C) closely held corporations 
D) foreign corporations

Question 12

Identify which of the following statements is true.

Accepted Answer

A) An affiliated group member's allocated share of an NOL from a consolidated return year may not be available as a carryback to a separate return year of the common parent corporation. 
B) If a corporation ceases to be a member of an affiliated group,the corporation is entitled to carry forward its share of the consolidated NOL even if the NOL could be used in full on the consolidated return for the year of cessation. 
C) The SRLY (separate return limitation year)rules are designed to prevent the affiliated group from offsetting its current year taxable income by purchasing corporations having NOL carryovers in order to use their NOLs. 
D) All of the above are false. 
A) An affiliated group member's allocated share of an NOL from a consolidated return year may not be available as a carryback to a separate return year of the common parent corporation. 
B) If a corporation ceases to be a member of an affiliated group,the corporation is entitled to carry forward its share of the consolidated NOL even if the NOL could be used in full on the consolidated return for the year of cessation. 
C) The SRLY (separate return limitation year)rules are designed to prevent the affiliated group from offsetting its current year taxable income by purchasing corporations having NOL carryovers in order to use their NOLs. 
D) All of the above are false.

Question 13

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

Accepted Answer

The parent corporation must own at least

Question 14

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) $7,350 
C) $6,650 
D) $7,950 
A) $7,700 
B) $7,350 
C) $6,650 
D) $7,950

Question 15

Identify which of the following statements is true.

Accepted Answer

A) The charitable contribution deduction is calculated on a separate return basis for each group member,and the separate company deductions of the individual group members are totaled to arrive at the consolidated deduction. 
B) An affiliated group member cannot carry over any unused charitable contribution deduction from a consolidated return year to a separate return year if the member leaves the group prior to the end of the current consolidated return year. 
C) Charitable contributions,which cannot be deducted in a consolidated return due to the 10% deduction limitation,can be carried forward indefinitely by the affiliated group. 
D) All of the above are false. 
A) The charitable contribution deduction is calculated on a separate return basis for each group member,and the separate company deductions of the individual group members are totaled to arrive at the consolidated deduction. 
B) An affiliated group member cannot carry over any unused charitable contribution deduction from a consolidated return year to a separate return year if the member leaves the group prior to the end of the current consolidated return year. 
C) Charitable contributions,which cannot be deducted in a consolidated return due to the 10% deduction limitation,can be carried forward indefinitely by the affiliated group. 
D) All of the above are false.

Question 16

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 17

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 depreciation can be claimed by Subsidiary Corporation in the first year it uses the machine?

Accepted Answer

The basis of the machine to Parent on th

Question 18

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 19

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 20

Identify which of the following statements is true.

Accepted Answer

A) Corporations that join in a consolidated return must adopt the same tax year as the parent corporation. 
B) Permission to discontinue the filing of consolidated tax returns is sometimes granted by the IRS. 
C) Additional administrative costs may be incurred when filing a consolidated tax return. 
D) All of the above are true. 
A) Corporations that join in a consolidated return must adopt the same tax year as the parent corporation. 
B) Permission to discontinue the filing of consolidated tax returns is sometimes granted by the IRS. 
C) Additional administrative costs may be incurred when filing a consolidated tax return. 
D) All of the above are true.

Exam 8: Consolidated Tax Returns

To be an affiliated group,the parent corporation must directly own at least 80% of another group member.

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

What types of corporations are not includible corporations for purposes of determining whether or not an affiliated group exists?

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

Identify which of the following statements is true.

Which of the following is not reported by an affiliated group on a consolidated basis?

A separate return year is a corporation's tax year for which it files a separate tax return or files a consolidated tax return with another affiliated group.

How do intercompany transactions affect the calculation of capital gains/losses?

Which of the following corporations is an includible corporation for purposes of filing a consolidated tax 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.

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

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?

Identify which of the following statements is true.

Identify which of the following statements is true.

A consolidated return's tax liability is owed by

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?

Identify which of the following statements is true.

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