Question 1

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 2

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 3

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 4

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 5

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 6

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 7

Define intercompany transactions and explain the two types of transactions.

Accepted Answer

An intercompany transaction takes place

Question 8

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 Cardinal'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 9

Apple Corporation and Banana Corporation file consolidated returns.In January 2007,Apple sold Banana property with a basis of $120,000 for its fair value of $150,000.Banana sold the property to an unrelated party in April 2008 for $200,000.What amount of gain should be reported for these transactions in the consolidated returns for 2011 and 2012?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 10

Last year,Trix Corporation acquired 100% of Track Corporation.The acquisition occurred on July 1,which was five months after Track's creation.The corporations filed separate returns that year and have filed consolidated returns since then.The group results for the years,excluding the NOL deduction,are shown below.   Which of the following statements is incorrect?

Accepted Answer

A)  Last year is an SRLY (separate return limitation year) with respect to Track Corporation. 
B)  Track's last year loss is offset against the consolidated current taxable income. 
C)  Track's last year loss can be used to offset the current year's consolidated taxable income. 
D)  None of Track's last year's loss can be used to offset the current year's consolidated taxable income. 
A)  Last year is an SRLY (separate return limitation year) with respect to Track Corporation. 
B)  Track's last year loss is offset against the consolidated current taxable income. 
C)  Track's last year loss can be used to offset the current year's consolidated taxable income. 
D)  None of Track's last year's loss can be used to offset the current year's consolidated taxable income.

Question 11

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 12

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 13

Identify which of the following statements is true.

Accepted Answer

A)  The parent corporation may elect that the affiliated group use its NOL as a carryforward only. 
B)  A portion of a consolidated NOL can be carried back or forward to a separate return year of an individual group member. 
C)  The entire consolidated NOL may be available as a carryback or a carryover to a separate return year of one of the members of an affiliated group. 
D)  All of the above are true. 
A)  The parent corporation may elect that the affiliated group use its NOL as a carryforward only. 
B)  A portion of a consolidated NOL can be carried back or forward to a separate return year of an individual group member. 
C)  The entire consolidated NOL may be available as a carryback or a carryover to a separate return year of one of the members of an affiliated group. 
D)  All of the above are true.

Question 14

Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

Accepted Answer

A) True 
 B)False

Question 15

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.

Question 16

Ajak Corporation owns 85% of the single class of Utech Corporation stock.Utech Corporation owns 35% of Tech Corporation.Ajak Corporation also owns 50% of Tech Corporation,and Tech Corporation owns 75% of Baxter Corporation.

Accepted Answer

A)  Ajak, Tech, Utech, and Baxter Corporations are an affiliated group. 
B)  Ajak, Tech, and Baxter Corporations are an affiliated group. 
C)  Ajak, Tech, and Utech Corporations are an affiliated group. 
D)  None of the above are correct. 
A)  Ajak, Tech, Utech, and Baxter Corporations are an affiliated group. 
B)  Ajak, Tech, and Baxter Corporations are an affiliated group. 
C)  Ajak, Tech, and Utech Corporations are an affiliated group. 
D)  None of the above are correct.

Question 17

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

Accepted Answer

A) True 
 B)False

Question 18

Key and Glass Corporations were organized last year.They became an affiliated group and filed separate tax returns.This year,the corporations begin filing a consolidated tax return.Key and Glass report the following results:   Which of the following statements is not correct?

Accepted Answer

A)  Key's last year NOL cannot offset Glass's last year profits. 
B)  Key's last year NOL cannot offset this year's consolidated taxable income. 
C)  Key's current year income must first be offset by Glass's current year loss. 
D)  Glass cannot carry its current year loss back against last year's income. 
A)  Key's last year NOL cannot offset Glass's last year profits. 
B)  Key's last year NOL cannot offset this year's consolidated taxable income. 
C)  Key's current year income must first be offset by Glass's current year loss. 
D)  Glass cannot carry its current year loss back against last year's income.

Question 19

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

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

Define intercompany transactions and explain the two types of transactions.

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?

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

Identify which of the following statements is true.

Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

Identify which of the following statements is true.

Ajak Corporation owns 85% of the single class of Utech Corporation stock.Utech Corporation owns 35% of Tech Corporation.Ajak Corporation also owns 50% of Tech Corporation,and Tech Corporation owns 75% of Baxter Corporation.

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

Key and Glass Corporations were organized last year.They became an affiliated group and filed separate tax returns.This year,the corporations begin filing a consolidated tax return.Key and Glass report the following results: Which of the following statements is not correct?

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?

Tax Research

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The Corporate Income Tax

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Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Partnership Formation and Operation

Special Partnership Issues

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The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

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Exam 8: Consolidated Tax Returns

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

Define intercompany transactions and explain the two types of transactions.

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?

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

Identify which of the following statements is true.

Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

Identify which of the following statements is true.

Ajak Corporation owns 85% of the single class of Utech Corporation stock.Utech Corporation owns 35% of Tech Corporation.Ajak Corporation also owns 50% of Tech Corporation,and Tech Corporation owns 75% of Baxter Corporation.

Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller.

Key and Glass Corporations were organized last year.They became an affiliated group and filed separate tax returns.This year,the corporations begin filing a consolidated tax return.Key and Glass report the following results: Which of the following statements is not correct?

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?

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