Question 1

The right to file on a consolidated basis is available to a group of corporations when they constitute a parent-subsidiary controlled group.

Accepted Answer

A) True 
 B)False

Question 2

If one member sells an asset with a realized gain to another member of an affiliated group,the gain on the transaction is not recognized at that time; such a deferral applies the ____________________ rule.

Accepted Answer

The answer of If one member sells an asset with...

Question 3

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
-Binding nature of election over multiple tax years

Accepted Answer

The answer of Match each of the following terms with...

Question 4

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
-Domestic production activities deduction (DPAD)

Accepted Answer

The answer of Match each of the following items with...

Question 5

When a member departs a consolidated group,it forfeits the use of any NOLs it generated while in the group.

Accepted Answer

A) True 
 B)False

Question 6

When a subsidiary sells to the parent some business-use property that has appreciated from its $20,000 basis to a $50,000 fair market value,the subsidiary immediately recognizes $30,000 ordinary income.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is eligible to join in a Federal consolidated return?

Accepted Answer

A) A sole proprietor with annual sales of more than $50 million. 
B) A limited liability company. 
C) A company organized in Germany. 
D) A corporation that operates in seven different U.S. states. 
E) None of the above can join a Federal consolidated group. 
A) A sole proprietor with annual sales of more than $50 million. 
B) A limited liability company. 
C) A company organized in Germany. 
D) A corporation that operates in seven different U.S. states. 
E) None of the above can join a Federal consolidated group.

Question 8

If subsidiary stock is redeemed or sold outside the group when an excess loss account exists,the selling parent corporation recognizes ordinary income equal to the account balance.

Accepted Answer

A) True 
 B)False

Question 9

ParentCo's separate taxable income was $100,000,and SubCo's was $40,000.Consolidated taxable income before contributions was $125,000.Charitable contributions made by the affiliated group included $20,000 by ParentCo and $30,000 by SubCo.Compute the group's maximum charitable contribution deduction.

Accepted Answer

A) $12,500. 
B) $20,000. 
C) $30,000. 
D) $50,000. 
E) Some other amount. 
A) $12,500. 
B) $20,000. 
C) $30,000. 
D) $50,000. 
E) Some other amount.

Question 10

ParentCo purchased all of the stock of SubCo on January 2,2008,and the two companies filed consolidated returns for 2008 and thereafter.Both entities were incorporated in 2007.Taxable income computations for the members include the following.Neither group member incurred any capital gain or loss transactions during these years,nor did they make any charitable contributions.No § 382 limit applies.
 
To what extent can SubCo's 2007 losses be used by the group in 2010?

Accepted Answer

A) $175,000. 
B) $130,000. 
C) $90,000. 
D) $0. 
E) Some other amount. 
A) $175,000. 
B) $130,000. 
C) $90,000. 
D) $0. 
E) Some other amount.

Question 11

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
-Compensation deductions

Accepted Answer

The answer of Match each of the following items with...

Question 12

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

Accepted Answer

The answer of Match each of the following items with...

Question 13

A Federal consolidated group can claim a dividends received deduction for payments among the affiliates.

Accepted Answer

A) True 
 B)False

Question 14

Summarize how the SRLY rules limit the consolidated group's deduction of member NOLs.

Accepted Answer

The SRLY l

Question 15

An example of an intercompany transaction is the use of the customer databases of the parent corporation by a subsidiary for an arm's length management fee.

Accepted Answer

A) True 
 B)False

Question 16

The consolidated return rules combine the members' transactions involving ____________________ items when computing consolidated taxable income.

Accepted Answer

The answer of The consolidated return rules combine the members'...

Question 17

The group of Parent Corporation,SubOne,and SubTwo has filed a consolidated return since 2008.The first two entities were incorporated in 2007,and SubTwo came into existence in 2008 through an asset spin-off from Parent.Taxable income computations for the members are shown below.None of the group members incurred any capital gain or loss transactions during 2007-2010,nor did they make any charitable contributions.
Describe the treatment of the group's 2009 consolidated NOL.Hint: Apply the offspring rule.
   
* Consolidated return year.

Accepted Answer

Lacking an election by ParentCo to forgo

Question 18

Keep Corporation joined an affiliated group by merger in 2005.The group generated a consolidated 2009 NOL,and Keep's share of the loss was $50,000.If the parent elects to forgo an NOL carryback,refunds or tax reductions resulting from the loss are received solely by the parent,and not by Keep separately.

Accepted Answer

A) True 
 B)False

Question 19

Affiliates must keep track of their shares of a consolidated NOL.

Accepted Answer

A) True 
 B)False

Question 20

Members of a consolidated group ____________________ (can/cannot)use different inventory methods.

Accepted Answer

The answer of Members of a consolidated group ____________________ (can/cannot)use...

The right to file on a consolidated basis is available to a group of corporations when they constitute a parent-subsidiary controlled group.

If one member sells an asset with a realized gain to another member of an affiliated group,the gain on the transaction is not recognized at that time; such a deferral applies the ____________________ rule.

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 -Binding nature of election over multiple tax years

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 -Domestic production activities deduction (DPAD)

When a member departs a consolidated group,it forfeits the use of any NOLs it generated while in the group.

When a subsidiary sells to the parent some business-use property that has appreciated from its $20,000 basis to a $50,000 fair market value,the subsidiary immediately recognizes $30,000 ordinary income.

Which of the following is eligible to join in a Federal consolidated return?

If subsidiary stock is redeemed or sold outside the group when an excess loss account exists,the selling parent corporation recognizes ordinary income equal to the account balance.

ParentCo's separate taxable income was $100,000,and SubCo's was $40,000.Consolidated taxable income before contributions was $125,000.Charitable contributions made by the affiliated group included $20,000 by ParentCo and $30,000 by SubCo.Compute the group's maximum charitable contribution deduction.

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 -Compensation deductions

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

A Federal consolidated group can claim a dividends received deduction for payments among the affiliates.

Summarize how the SRLY rules limit the consolidated group's deduction of member NOLs.

An example of an intercompany transaction is the use of the customer databases of the parent corporation by a subsidiary for an arm's length management fee.

The consolidated return rules combine the members' transactions involving ____________________ items when computing consolidated taxable income.

Affiliates must keep track of their shares of a consolidated NOL.

Members of a consolidated group ____________________ (can/cannot)use different inventory methods.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 8: Consolidated Tax Returns

The right to file on a consolidated basis is available to a group of corporations when they constitute a parent-subsidiary controlled group.

If one member sells an asset with a realized gain to another member of an affiliated group,the gain on the transaction is not recognized at that time; such a deferral applies the ____________________ rule.

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 -Binding nature of election over multiple tax years

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 -Domestic production activities deduction (DPAD)

When a member departs a consolidated group,it forfeits the use of any NOLs it generated while in the group.

When a subsidiary sells to the parent some business-use property that has appreciated from its $20,000 basis to a $50,000 fair market value,the subsidiary immediately recognizes $30,000 ordinary income.

Which of the following is eligible to join in a Federal consolidated return?

If subsidiary stock is redeemed or sold outside the group when an excess loss account exists,the selling parent corporation recognizes ordinary income equal to the account balance.

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 -Compensation deductions

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

A Federal consolidated group can claim a dividends received deduction for payments among the affiliates.

Summarize how the SRLY rules limit the consolidated group's deduction of member NOLs.

An example of an intercompany transaction is the use of the customer databases of the parent corporation by a subsidiary for an arm's length management fee.

The consolidated return rules combine the members' transactions involving ____________________ items when computing consolidated taxable income.

Affiliates must keep track of their shares of a consolidated NOL.

Members of a consolidated group ____________________ (can/cannot)use different inventory methods.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters