Exam 8: Consolidated Tax Returns

A consolidated Federal income tax group must meet the eligibility requirements of the Regulations only on the first day of the first year for which the election to consolidate is effective.

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 paid to other members.

Certain tax return items are computed on a group basis when a Federal consolidated return election is in place. List five or more of these group-basis items.

Which of the following potentially is a disadvantage of electing to file a Federal corporate income tax consolidated return?

Forming a Federal consolidated tax return group is a discretionary action by eligible affiliates. List several tax attributes and situations that might make a subsidiary an attractive partner for a parent corporation on a consolidated return.

For consolidated tax return purposes, goodwill is amortized as a deduction to taxable income. Under financial accounting rules, no such amortization is allowed.

The calendar-year Sterling Group files its Federal corporate income tax return on a consolidated basis. Its Form 1120 is due on March 15, or September 15 if an extended due date is approved by the IRS.

The casualty/theft gain/loss of the affiliates is an example of an item that is computed on a ____________________ basis on a Federal corporate income tax consolidated return.

ParentCo and SubOne have filed consolidated returns since 2008. SubTwo was formed in 2012 through an asset spin-off from ParentCo. SubTwo has joined in the filing of consolidated returns since then. Taxable income computations for the members include the following. None of the group members incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. If ParentCo does not elect to forgo the carryback of the 2012 net operating loss, how much of the 2012 consolidated net operating loss is carried back to offset prior years' income?

Generally, when a subsidiary leaves an on-going consolidated group, it must wait ____________________ years before it can reenter another consolidated group. or

Parent Corporation owns 100% of the stock of SubCo, and the two corporations file a consolidated tax return. Over a five-year period, the corporations generate the following taxable income/(loss). Indicate how you would assign the taxpayers' low marginal rates that apply to the group's first $75,000 of taxable income. Explain the rationale for your recommendation.

ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's consolidated taxable income or loss.

A joint venture, taxed like a partnership, can join in a consolidated Federal income tax return.

The purpose of the rules governing intercompany sales on a Federal consolidated tax return is to treat the group as though it is:

The domestic production activities deduction of a consolidated group can be greater than the sum of the deductions of the group members when filing separately.

How do the Federal consolidated return requirements differ in identifying an affiliated group rather than a parent-subsidiary controlled group?

How are the members of a Federal consolidated group affected by computations related to E & P?

After a takeover, the parent takes a fair market value cost basis in the subsidiary, for both book and tax purposes.

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

LargeCo files on a consolidated basis with LittleCo. The subsidiary was acquired for $400,000 on January 1, Year 1, and it paid a $75,000 dividend to LargeCo at the end of both Year 2 and Year 3.