Exam 8: Consolidated Tax Returns

Match each of the following items with the appropriate description, indicating whether the item is computed on a group basis on a consolidated tax return. a.Group item b.Not a group item -Cost of goods sold

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return. a.Advantage of consolidating b.Disadvantage of consolidating -Joint and several liability for Federal income tax

A hedge fund,taxed like a partnership,can join in a consolidated return.

Members of a controlled group share all but which of the following tax attributes?

Deferring recognition of an intercompany gain is one _________________________ (advantage/disadvantage)of electing to file consolidated returns.

A for-profit hospital can join an existing Federal consolidated group.

In computing consolidated taxable income,capital and § 1231 gains and losses are removed from the taxable incomes of the group members and determined on a group basis.

ParentCo owned 100% of SubCo for the entire year,and both companies use the accrual method of tax accounting.During the year,SubCo purchased $20,000 of supplies from ParentCo.In addition,SubCo provided internal audit services to ParentCo,which were worth $40,000.Including these transactions,ParentCo's separate taxable income was $75,000,and SubCo's separate taxable income was $80,000.What is the group's consolidated taxable income for the year?

The consolidated group reported the following taxable income amounts.Determine the net operating loss (NOL)that is apportioned to Minor.

If the negative adjustments to the stock basis of the subsidiary exceed the positive adjustments plus the subsidiary stock basis at the beginning of the tax year,a(n)____________________ ____________________ account is created.

In computing consolidated taxable income,the purchase of database services by Subsidiary from Parent is an example of a(n)_________________________ transaction.

Lacking elections to the contrary,consolidated NOLs are carried back two years and then forward twenty years.

Alb,Bud,and Coe constitute an affiliated group of corporations.Which of the following tax effects becomes more restrictive if an election is made to file on a consolidated basis?

Match each of the following items with the appropriate description, indicating whether the item increases or decreases the parent's basis in the stock of a subsidiary. a.Increases stock basis b.Decreases stock basis c.No effect on stock basis -Dividend paid to parent out of parent E & P

Calendar year Parent Corporation acquired all of the stock of SubCo on January 1,year 1,for $400,000.The subsidiary's operating gains and losses are shown below.In addition,a $40,000 dividend is paid early in year 2. Complete the following chart,indicating the appropriate stock basis and excess loss account amounts.

The consolidated group reports a net operating loss (NOL)for the year.The tax law works to:

When an affiliated group elects to file Federal consolidated income tax returns,it gives up the ability to claim a __________ __________ deduction for distributions of profits among the members.

Match each of the following items with the appropriate description, indicating whether the item increases or decreases the parent's basis in the stock of a subsidiary. a.Increases stock basis b.Decreases stock basis c.No effect on stock basis -Member's operating loss,when stock basis = $0

Which of the following is eligible to file Federal income tax returns on a consolidated basis?

ParentCo acquired all of the stock of SubCo on January 1,2007,for $1,000,000.The parties immediately elected to file consolidated income tax returns.SubCo generated taxable income of $50,000 for 2007 and paid a dividend of $75,000 to ParentCo.In 2008,SubCo generated an operating loss of $350,000,and in 2009 it produced taxable income of $65,000.As of the last day of 2009,what was ParentCo's basis in the stock of SubCo?