Question 1

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

Accepted Answer

The effect of having a loss ta

Question 2

Blair and Cannon Corporations are 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.   Which of the following statements is correct?

Accepted Answer

A)  The consolidated group reports a net short-term capital gain of $1,000. 
B)  Blair Corporation's separate return reports a $4,000 net long-term capital gain. 
C)  Cannon Corporation's separate return reports a $1,000 net long-term capital loss. 
D)  All three of the above are correct. 
A)  The consolidated group reports a net short-term capital gain of $1,000. 
B)  Blair Corporation's separate return reports a $4,000 net long-term capital gain. 
C)  Cannon Corporation's separate return reports a $1,000 net long-term capital loss. 
D)  All three of the above are correct.

Question 3

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

Accepted Answer

A)  can offset taxable income of Pants and Skirt Corporations from last year. 
B)  can offset Zipper Corporation separate return taxable income only from last year. 
C)  can be used only as a carryover to the future. 
D)  can offset Zipper Corporation separate return taxable income from last year and then be carried forward to offset the affiliated group's subsequent taxable income. 
A)  can offset taxable income of Pants and Skirt Corporations from last year. 
B)  can offset Zipper Corporation separate return taxable income only from last year. 
C)  can be used only as a carryover to the future. 
D)  can offset Zipper Corporation separate return taxable income from last year and then be carried forward to offset the affiliated group's subsequent taxable income.

Question 4

The IRS can attempt to collect taxes owed on a consolidated return from any of the members of the consolidated group.

Accepted Answer

A) True 
 B)False

Question 5

Cardinal and Bluebird Corporations both use a calendar year as their tax year.At the close of business on June 30,Cardinal Corporation buys all of Bluebird Corporation's stock.If the two corporations file a consolidated return and both corporations earn their income evenly throughout the year,what portion of Bluebird's income will be included in the consolidated return? (Assume all months have 30 days.)

Accepted Answer

A)  100% 
B)  50% 
C)  0% 
D)  none of the above 
A)  100% 
B)  50% 
C)  0% 
D)  none of the above

Question 6

A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  The starting point for the consolidated alternative minimum taxable income computation is consolidated taxable income before the NOL deduction. 
B)  The difference between the consolidated ACE amount and the consolidated preadjustment AMTI is an adjustment to consolidated taxable income in arriving at AMTI. 
C)  Each corporation is permitted its own $40,000 statutory exemption. 
D)  If the consolidated tentative minimum tax is smaller than the consolidated regular tax, there is no alternative minimum tax liability. 
A)  The starting point for the consolidated alternative minimum taxable income computation is consolidated taxable income before the NOL deduction. 
B)  The difference between the consolidated ACE amount and the consolidated preadjustment AMTI is an adjustment to consolidated taxable income in arriving at AMTI. 
C)  Each corporation is permitted its own $40,000 statutory exemption. 
D)  If the consolidated tentative minimum tax is smaller than the consolidated regular tax, there is no alternative minimum tax liability.

Question 8

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 9

Which of the following statements is true?

Accepted Answer

A)  The definition of an affiliated group is the same for purposes of calculating the U.S. production activities deduction as it is for filing a consolidated return. 
B)  The consolidated charitable contributions deduction is limited to 10% of adjusted consolidated taxable income, without regard to the consolidated DRD, consolidated NOL carrybacks, consolidated capital loss carrybacks, and consolidated charitable contributions deduction. 
C)  The definition of an affiliated group for purposes of the U.S. production activities deduction uses a 60% ownership threshold. 
D)  All of the above are true statements. 
A)  The definition of an affiliated group is the same for purposes of calculating the U.S. production activities deduction as it is for filing a consolidated return. 
B)  The consolidated charitable contributions deduction is limited to 10% of adjusted consolidated taxable income, without regard to the consolidated DRD, consolidated NOL carrybacks, consolidated capital loss carrybacks, and consolidated charitable contributions deduction. 
C)  The definition of an affiliated group for purposes of the U.S. production activities deduction uses a 60% ownership threshold. 
D)  All of the above are true statements.

Question 10

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

Accepted Answer

Deferred intercompany gains/lo

Question 11

Brother-sister controlled groups can elect to file a consolidated tax return.

Accepted Answer

A) True 
 B)False

Question 12

Boxcar Corporation and Sidecar Corporation,an affiliated group,reports the following results for the current year:   The affiliated group's consolidated taxable income is

Accepted Answer

A)  $40,000. 
B)  $49,000. 
C)  $51,000. 
D)  $52,000. 
A)  $40,000. 
B)  $49,000. 
C)  $51,000. 
D)  $52,000.

Question 13

Alto and Bass Corporations have filed consolidated tax returns for several calendar years.At the close of business on September 30,Alto Corporation sells all of the Bass Corporation stock.What portion of Alto's and Bass's income for the current year will be included in the consolidated return,assuming its income is earned evenly throughout the year and all months have 30 days?

Accepted Answer

A)    
B)    
C)    
D)  none of the above 
A)    
B)    
C)    
D)  none of the above

Question 14

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 15

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 16

Identify which of the following statements is true.

Accepted Answer

A)  Rules for carryforward and carryback of a consolidated net capital loss and a consolidated NOL are the same with the exception of the carryforward period. 
B)  Capital loss carrybacks and carryforwards are all treated as short-term capital losses. 
C)  A member leaving an affiliated group cannot use capital loss carryovers that originated in one of its previous separate return years. 
D)  All of the above are false. 
A)  Rules for carryforward and carryback of a consolidated net capital loss and a consolidated NOL are the same with the exception of the carryforward period. 
B)  Capital loss carrybacks and carryforwards are all treated as short-term capital losses. 
C)  A member leaving an affiliated group cannot use capital loss carryovers that originated in one of its previous separate return years. 
D)  All of the above are false.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Toby owns all of the single class of stock of James and Mony Corporations.James Corporation owns all of Volt Corporation's stock.Mony owns all of Wegnin Corporation.Mony and Wegnin Corporations are foreign corporations.Toby,James,and Volt are domestic corporations.Are the corporations part of an affiliated group?

Accepted Answer

Toby,James,and Volt constitute

Question 19

Which of the following events is an intercompany transaction?

Accepted Answer

A)  a capital contribution 
B)  accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting 
C)  dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation 
D)  a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group 
A)  a capital contribution 
B)  accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting 
C)  dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation 
D)  a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group

Question 20

What is the carryback and carryforward rule for consolidated NOLs?

Accepted Answer

A consolidated NOL may be carr

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

The IRS can attempt to collect taxes owed on a consolidated return from any of the members of the consolidated group.

A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.

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

Identify which of the following statements is true.

Which of the following statements is true?

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

Brother-sister controlled groups can elect to file a consolidated tax return.

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.

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

Which of the following events is an intercompany transaction?

What is the carryback and carryforward rule for consolidated NOLs?

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

Exam 8: Consolidated Tax Returns

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

The IRS can attempt to collect taxes owed on a consolidated return from any of the members of the consolidated group.

A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.

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

Identify which of the following statements is true.

Which of the following statements is true?

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

Brother-sister controlled groups can elect to file a consolidated tax return.

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.

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

Which of the following events is an intercompany transaction?

What is the carryback and carryforward rule for consolidated NOLs?

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