Question 1

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 2

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 3

Identify which of the following statements is true.

Accepted Answer

A)  P Corporation receives a dividend from its 100%-owned subsidiary corporation S. P and S have filed consolidated tax returns for a number of years. The dividend payment is out of S's earnings and profits and reduces P's investment in S. The dividend is an intercompany transaction and excluded from P's gross income. 
B)  The consolidated dividends-received deduction percentage for dividends received by one affiliated group member from another affiliated group member is always 100%. 
C)  The dividends-received deduction claimed when a $50,000 dividend is received from a 100%-owned nonconsolidated life insurance company is $35,000 (ignoring any dividends-received deduction limitations). 
D)  All of the above are false. 
A)  P Corporation receives a dividend from its 100%-owned subsidiary corporation S. P and S have filed consolidated tax returns for a number of years. The dividend payment is out of S's earnings and profits and reduces P's investment in S. The dividend is an intercompany transaction and excluded from P's gross income. 
B)  The consolidated dividends-received deduction percentage for dividends received by one affiliated group member from another affiliated group member is always 100%. 
C)  The dividends-received deduction claimed when a $50,000 dividend is received from a 100%-owned nonconsolidated life insurance company is $35,000 (ignoring any dividends-received deduction limitations). 
D)  All of the above are false.

Question 4

The Alto-Baxter affiliated group filed a consolidated return for the first time last year.The group does not come under the "large" corporation rules.For last year,the group reports a tax liability of $60,000.Cooper Corporation has a $30,000 tax liability last year.This year,the Alto-Baxter affiliated group purchased all of the Cooper stock.This year,the Alto-Baxter-Cooper group reports a $110,000 consolidated tax liability.To avoid penalties for the current year,the group must make timely estimated tax payments of how much during the year?

Accepted Answer

A)  $60,000 
B)  $90,000 
C)  $110,000 
D)  No estimated tax payments are required. 
A)  $60,000 
B)  $90,000 
C)  $110,000 
D)  No estimated tax payments are required.

Question 5

Roland,Shedrick,and Tyrone Corporations formed an affiliated group a number of years ago,which has since filed consolidated tax returns.No prior Sec.1231 losses have been reported by any group member.The group had a consolidated capital loss carryover last year.For the current year,the group reports the following results:   Which of following statements is incorrect?

Accepted Answer

A)  No Sec. 1231 recapture can occur this year. 
B)  The net capital gain is taxed at the regular corporate tax rates. 
C)  The Sec. 1231 loss is treated as an ordinary loss. 
D)  The net capital gain is $20,000. 
A)  No Sec. 1231 recapture can occur this year. 
B)  The net capital gain is taxed at the regular corporate tax rates. 
C)  The Sec. 1231 loss is treated as an ordinary loss. 
D)  The net capital gain is $20,000.

Question 6

Identify which of the following statements is false.

Accepted Answer

A)  A corresponding item includes the income, gain, deduction, or loss amount reported by the buyer from an intercompany transaction, or from property acquired in an intercompany transaction. 
B)  Affiliated groups of corporations filing a consolidated tax return are not eligible for the small corporation exemption from the corporate alternative minimum tax. 
C)  An intercompany transaction generally results in the selling member and buying member in a property transaction being treated as divisions of a single corporation. 
D)  Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return. 
A)  A corresponding item includes the income, gain, deduction, or loss amount reported by the buyer from an intercompany transaction, or from property acquired in an intercompany transaction. 
B)  Affiliated groups of corporations filing a consolidated tax return are not eligible for the small corporation exemption from the corporate alternative minimum tax. 
C)  An intercompany transaction generally results in the selling member and buying member in a property transaction being treated as divisions of a single corporation. 
D)  Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

Question 7

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 8

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 9

On January 1,Alpha Corporation purchases 100% of the stock of Omega Corporation for $2 million.During the year,Omega Corporation earns $350,000 of taxable income,$30,000 of tax-exempt income,and distributes $150,000 in dividends.Each company paid its own tax liability.Assume a 34% tax rate.What basis adjustment must Alpha Corporation make at year-end?

Accepted Answer

Alpha Corporation's initial basis for th

Question 10

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 11

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 12

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 13

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 14

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.

Accepted Answer

A) True 
 B)False

Question 15

What issues determine whether an affiliated group exists?

Accepted Answer

In determining whether an affiliated gro

Question 16

The Alpha-Beta affiliated group has a consolidated regular tax amount of $52,000 and a tentative minimum tax amount of $50,000 in the current year.The maximum general business credit that can be used on the consolidated return is

Accepted Answer

A)  $2,000. 
B)  $6,750. 
C)  $50,000. 
D)  none of the above 
A)  $2,000. 
B)  $6,750. 
C)  $50,000. 
D)  none of the above

Question 17

Jeffrey Corporation owns 85% of Placer Corporation and 25% of Mercer Corporation.Placer Corporation owns 60% of Mercer Corporation and 45% of Tyson Corporation.Jeffrey Corporation also owns 85% of Apple Corporation and Apple Corporation owns 30% of Tyson Corporation.Which of these corporations are members of an affiliated group if all percentages represent voting power and value held by the respective corporations?

Accepted Answer

Jeffrey Corporation is the parent corpor

Question 18

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

Accepted Answer

Three forms of controlled groups are per

Question 19

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 20

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,

Accepted Answer

A)  the interest expense is deductible when accrued. 
B)  the interest expense and interest income may be reported in different consolidated return years. 
C)  the interest income is reported when the interest expense is accrued by Subsidiary. 
D)  the interest expense deduction is taken when Parent reports the interest income. 
A)  the interest expense is deductible when accrued. 
B)  the interest expense and interest income may be reported in different consolidated return years. 
C)  the interest income is reported when the interest expense is accrued by Subsidiary. 
D)  the interest expense deduction is taken when Parent reports the interest income.

Identify which of the following statements is true.

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

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is true.

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?

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

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

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

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.

What issues determine whether an affiliated group exists?

The Alpha-Beta affiliated group has a consolidated regular tax amount of $52,000 and a tentative minimum tax amount of $50,000 in the current year.The maximum general business credit that can be used on the consolidated return is

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

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,

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Exam 8: Consolidated Tax Returns

Identify which of the following statements is true.

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

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is true.

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?

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

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

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

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.

What issues determine whether an affiliated group exists?

The Alpha-Beta affiliated group has a consolidated regular tax amount of $52,000 and a tentative minimum tax amount of $50,000 in the current year.The maximum general business credit that can be used on the consolidated return is

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

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,

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

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters