Question 1

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 2

Blitzer Corporation is the parent corporation of a 10-member group that has filed consolidated tax returns for a number of years.Last year,the group sold all the stock of Wolf Corporation to Jerry Jensen.This year,Wolf Corporation reported a $300,000 NOL.Wolf's taxable income while a group member averaged $200,000 annually for the past five years but is expected to be only $50,000 next year due to start-up costs that will be incurred with the introduction of a new product line.Profits are expected to increase in each succeeding year.What issues should Blitzer have considered when trying to value Wolf's NOL prior to its sale? What tax issues should Wolf now consider when deciding how to use its NOL?

Accepted Answer

•What alternatives exist for using the N

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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 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

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 9

Mariano owns all of Alpha Corporation,which owns 100% of Beta Corporation's single class of stock.On January 1,Alpha and Beta Corporations report a consolidated NOL carryover from prior years.What is the maximum percentage of Alpha Corporation's single class of stock that Mariano can sell to a single shareholder without triggering the Sec.382 loss limitation?

Accepted Answer

A) 0% 
B) 50% 
C) 75% 
D) 80% 
A) 0% 
B) 50% 
C) 75% 
D) 80%

Question 10

Parent Corporation purchases a machine (a five-year property)for $20,000.It claims $4,000 of depreciation under the MACRS rules in the first year it owns the property.At the close of business on the last day of the first year,Parent sells the machine to a 100%-owned corporation (Subsidiary)for $18,000.Subsidiary immediately commences depreciating the machine as a five-year property using the regular MACRS rules.What depreciation can be claimed by Subsidiary Corporation in the first year it uses the machine?

Accepted Answer

The basis of the machine to Parent on th

Question 11

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 12

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 13

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 14

Parent Corporation sells land (a capital asset)to Subsidiary Corporation in an intercompany transaction,recognizing a $25,000 gain.Subsidiary holds the land as an investment for five years before selling the land to a nonmember of the group on an installment basis in a sale in which a $50,000 gain is realized.The sales proceeds are collectible in four equal installments with an appropriate interest amount being charged to the purchaser.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 capital gain is included in consolidated taxable income when Subsidiary sells the land. 
B) A $25,000 capital gain from Parent and a $50,000 capital gain from Subsidiary are included in consolidated taxable income when Subsidiary sells the land. 
C) The $25,000 capital gain from Parent and $50,000 capital gain from Subsidiary are included ratably in consolidated taxable income,commencing in the year the first installment is received. 
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 capital gain is included in consolidated taxable income when Subsidiary sells the land. 
B) A $25,000 capital gain from Parent and a $50,000 capital gain from Subsidiary are included in consolidated taxable income when Subsidiary sells the land. 
C) The $25,000 capital gain from Parent and $50,000 capital gain from Subsidiary are included ratably in consolidated taxable income,commencing in the year the first installment is received. 
D) None of the above are correct

Question 15

What types of corporations are not includible corporations for purposes of determining whether or not an affiliated group exists?

Accepted Answer

Special tax status corporations are not

Question 16

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 17

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 this year (August 22)for $130,000 to a corporation that was not a member of the affiliated group.The $130,000 purchase price is to be collected in five equal,annual installments,commencing with the current year's sale date.What gains and losses are recognized,deferred,or restored by Gee and Wilkers Corporations?

Accepted Answer

Gee Corporation must report the $10,000

Question 18

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

Accepted Answer

A) intercompany dividends 
B) undistributed subsidiary earnings 
C) intercompany sale 
D) None of the above items create temporary differences. 
A) intercompany dividends 
B) undistributed subsidiary earnings 
C) intercompany sale 
D) None of the above items create temporary differences.

Question 19

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

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 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?

Which of the following statements is true?

Identify which of the following statements is true.

Identify which of the following statements is true.

What types of corporations are not includible corporations for purposes of determining whether or not an affiliated group exists?

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

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

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 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?

Which of the following statements is true?

Identify which of the following statements is true.

Identify which of the following statements is true.

What types of corporations are not includible corporations for purposes of determining whether or not an affiliated group exists?

Which of the following intercompany transactions creates temporary book/tax differences when a parent corporation owns 100% of a subsidiary's stock and the companies file a consolidated return?

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