Chat with AIExam 8: Consolidated Tax Returns
Exam 1: Tax Research115 Questions
Exam 2: Corporate Formations and Capital Structure123 Questions
Exam 3: The Corporate Income Tax128 Questions
Exam 4: Corporate Nonliquidating Distributions113 Questions
Exam 5: Other Corporate Tax Levies103 Questions
Exam 6: Corporate Liquidating Distributions103 Questions
Exam 7: Corporate Acquisitions and Reorganizations99 Questions
Exam 8: Consolidated Tax Returns99 Questions
Exam 9: Partnership Formation and Operation114 Questions
Exam 10: Special Partnership Issues107 Questions
Exam 11: US Corporations103 Questions
Exam 12: The Gift Tax105 Questions
Exam 13: The Estate Tax107 Questions
Exam 14: Income Taxation of Trusts and Estates105 Questions
Exam 15: Administrative Procedures104 Questions
Exam 16: US Taxation of Foreign-Related Transactions99 Questions
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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?
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VerifiedD
Marietta and Alpharetta Corporation,two accrual method of accounting corporations that use the calendar year as their tax year,have filed consolidated tax returns for a number of years.Alpharetta Corporation,a 100% owned subsidiary of Marietta,is transferring a patent,equipment,and working capital to newly created Georgia Corporation in exchange for 100% of its stock.In 2011,the corporation will begin to produce parts for the computer industry.Georgia Corporation expects to incur organizational expenditures of $10,000 and start-up expenditures of $60,000.What tax issues should Georgia Corporation consider with respect to the selection of its overall accounting method,inventory method,and tax year,and the proper reporting of its organizational and start-up expenditures?
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(63) Correct Answer:Verified
Verified• What tax year can Georgia Corporation elect?
• What overall method of accounting can Georgia Corporation elect?
• What inventory method can Georgia Corporation elect?
• How does Georgia Corporation treat its organizational expenditures? Its start-up expenditures?
Georgia Corporation must use the same tax year as the other two corporations in its affiliated group.In general,Georgia Corporation can elect to use the cash,accrual,or hybrid methods of accounting.However,since it is producing parts for the computer industry,inventories will be a material income producing factor,and it must use the accrual method of accounting for its sales-related activities.It is possible for Georgia Corporation to use the hybrid accounting method,and if such an election were made,Georgia would not be required to use the accrual method of accounting for its other income and expense items.It need not use the same accounting methods as the other two corporations in the affiliated group.Georgia Corporation can elect any of the inventory methods acceptable under Sec.471.It does not need to use the same inventory method as the other two corporations in its affiliated group.Georgia Corporation can elect to amortize its organizational expenditures and its start-up costs whether or not the other two corporations have made similar elections.There is no restriction under Code Secs.195 and 248,or the consolidated tax return regulations,that similar treatment of such expenditures be followed by all three corporations.
Blue and Gold Corporations are members of the Blue-Gold affiliated group,which filed a consolidated tax return for last year,reporting a $200,000 consolidated NOL.Small taxable income amounts were reported by Blue and Gold in separate tax returns filed in years prior to last year.Early in the current year,100% of Blue's stock is purchased by Robert Martin who contributes additional funds to Blue Corporation sufficient to acquire all of Green Corporation's stock.For the current year,the affiliated group reports the following results (excluding the consolidated NOL deduction): 
Which of the following statements is correct?
Which of the following statements is correct?Free
(Multiple Choice)
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(82) Correct Answer:Verified
VerifiedC
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?
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(74) Mariano owns all of Alpha Corporation,which owns 100% of Beta Corporation's single class of stock.On January 1,Alpha and Beta Corporations report a consolidated NOL carryover from prior years.What is the maximum percentage of Alpha Corporation's single class of stock that Mariano can sell to a single shareholder without triggering the Sec.382 loss limitation?
(Multiple Choice)
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(74) Blair and Cannon Corporations are the two members of an affiliated group.No prior net Sec.1231 losses have been reported by any group member.The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows: 
Included in the above totals is $6,000 of long-term capital losses recognized by Cannon on an intercompany transaction.Excluded from the above is a $4,000 Sec.1231 gain originally deferred by Cannon that must be reported by the group in the current year.
Which one of the following statements is incorrect?
Included in the above totals is $6,000 of long-term capital losses recognized by Cannon on an intercompany transaction.Excluded from the above is a $4,000 Sec.1231 gain originally deferred by Cannon that must be reported by the group in the current year.
Which one of the following statements is incorrect? (Multiple Choice)
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(93) Diana Corporation owns stock of Tomika Corporation.For Diana and Tomika to qualify for the filing of consolidated returns,at least what percentage of Tomika's total voting power and total value of stock must be directly owned by Diana?
(Multiple Choice)
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(88) 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.
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(82) 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?
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(78) Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?
(Multiple Choice)
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(76) 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?
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(71) Which of the following corporations is an includible corporation for purposes of filing a consolidated tax return?
(Multiple Choice)
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(61) Parent Corporation sells land (a capital asset)to Subsidiary Corporation in an intercompany transaction,recognizing a $25,000 gain.Subsidiary holds the land as an investment for five years before selling the land to a nonmember of the group on an installment basis in a sale in which a $50,000 gain is realized.The sales proceeds are collectible in four equal installments with an appropriate interest amount being charged to the purchaser.Which statement is correct?
(Multiple Choice)
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