Exam 8: Consolidated Tax Returns

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2011. 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. The 2013 consolidated loss:

When a consolidated NOL is generated, each affiliate is allocated a share of the loss.

Which of the following is not a requirement that must be met before a group files a consolidated return?

How do the members of a consolidated group split among themselves the benefits of the lower tax brackets on the first $75,000 of taxable income?

If there is a balance in the excess loss account when a subsidiary's stock is sold, the balance is recognized as ____________________.

In a Federal consolidated tax return group, who is responsible to pay the tax liability-the parent, the subsidiaries, or both? How are these tax-payable amounts determined?

What tax accounting period is used by the members of a Federal consolidated group?

A group's election to file consolidated Federal corporate income tax returns must be made by the extended due date of the first return on which the consolidation is applied.

With the filing of its first consolidated return, a Federal consolidated group makes an irrevocable election as to how it will allocate a tax year's income tax liability among the group members.

When the net accumulated taxable losses of a subsidiary exceed the parent's acquisition price, the parent's basis in the subsidiary's stock becomes negative.

The consolidated tax return regulations use "SRLY" limitations with respect to losses of a subsidiary that can be deducted on the consolidated return. Describe the various SRLY rules that might apply to a consolidated group member's losses.

Which of the following statements is true with regard to intercompany transactions?

When both apply, the § 382 NOL limitation rules override the ____________________ limits.

ParentCo purchased all of the stock of ChildCo on January 2, 2011, and the two companies filed consolidated returns for 2011 and thereafter. Both entities were incorporated in 2010. 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. Assuming that no election is made to forgo the carryback, to what extent are ChildCo's 2010 losses used by the group in 2011-2013?

To be part of a Federal consolidated return, an entity cannot be ineligible to join an affiliated group. List three or more business entities that cannot be part of a Federal consolidated tax return group.

A tax-exempt hospital cannot join in a consolidated return.

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

ParentCo's separate taxable income was $200,000, and SubCo's was $50,000. Consolidated taxable income before contributions was $200,000. Charitable contributions made by the affiliated group included $60,000 by ParentCo and $10,000 by SubCo. Compute the group's maximum charitable contribution deduction.

Describe the general computational method used by a Federal consolidated group in computing taxable income.

One of the motivations for the consolidated return rules is to discourage conglomerates from trafficking in the deductible ____________________ of other entities.