Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  The lower tax rates on the first $75,000 of taxable income. 
B)  The tax accounting inventory method used by the members. 
C)  The $40,000 AMT exemption. 
D)  The floor on the accumulated earnings credit. 
A)  The lower tax rates on the first $75,000 of taxable income. 
B)  The tax accounting inventory method used by the members. 
C)  The $40,000 AMT exemption. 
D)  The floor on the accumulated earnings credit.

Question 3

Which of the following is not generally a disadvantage of filing Federal corporate income tax returns on a consolidated basis?

Accepted Answer

A)  Compliance costs usually are higher when a consolidation election is in effect. 
B)  Realized losses from transactions between affiliates are not recognized immediately. 
C)  Capital gains from one affiliate can be offset by the capital losses from another. This can reduce the tax liabilities of the group as a whole. 
D)  The election generally is binding for future tax years. 
A)  Compliance costs usually are higher when a consolidation election is in effect. 
B)  Realized losses from transactions between affiliates are not recognized immediately. 
C)  Capital gains from one affiliate can be offset by the capital losses from another. This can reduce the tax liabilities of the group as a whole. 
D)  The election generally is binding for future tax years.

Question 4

If, on joining an affiliated group, SubCo has a different tax year than that of ParentCo, SubCo must switch its year-end to ParentCo's by the end of the ____________________ (first, second, etc.) tax year after the election to consolidate.
or

Accepted Answer

The answer of If, on joining an affiliated group, SubCo...

Question 5

In the year that the group terminates its consolidation election, a consolidated group's deferred gain from an intercompany asset sale between affiliates is recognized in full, under the ____________________ rule.

Accepted Answer

The answer of In the year that the group terminates...

Question 6

Which of the following items is not computed on a consolidated basis?

Accepted Answer

A)  Dividends received deduction. 
B)  § 1231 losses. 
C)  Charitable contributions. 
D)  Cost recovery deduction. 
A)  Dividends received deduction. 
B)  § 1231 losses. 
C)  Charitable contributions. 
D)  Cost recovery deduction.

Question 7

Most of the rules governing the use of consolidated returns are found in tax ____________________, and not the ____________________.

Accepted Answer

The answer of Most of the rules governing the use...

Question 8

In the context of a Federal consolidated income tax return, describe the matching rule and the acceleration rule. The Regulations apply these rules to some of the intercompany transactions of an affiliated group.

Accepted Answer

Gain or loss realized on property transa

Question 9

Most of the Federal consolidated income tax return rules are found in detailed sections of the Internal Revenue Code.

Accepted Answer

A) True 
 B)False

Question 10

The rules for computing Federal consolidated taxable income can differ a significant way from those governing financial reporting for conglomerates.

Accepted Answer

A) True 
 B)False

Question 11

The Parent consolidated group reports the following results for the tax year. Determine each member's share of the consolidated tax liability, assuming that the members all have consented to use the relative taxable income tax-sharing method. Dollar amounts are listed in millions, and a 35% marginal income tax rate applies.

Accepted Answer

Consolidated tax lia

Question 12

Tax incentives constitute the primary motivation for most corporations to form a conglomerate and file tax and financial accounting reports on a consolidated basis.

Accepted Answer

A) True 
 B)False

Question 13

The starting point in computing consolidated taxable income is the separate Federal taxable income amounts of the affiliated group members.

Accepted Answer

A) True 
 B)False

Question 14

ParentCo and SubCo had the following items of income and deduction for the current year.   Compute ParentCo and SubCo's taxable income or loss computed on a separate basis.
ParentCo SubCo

Accepted Answer

A)  $85,000 $5,000 
B)  $85,000 $3,000 
C)  $85,500 $5,000 
D)  $85,500 $3,000 
E)  None of the above. 
A)  $85,000 $5,000 
B)  $85,000 $3,000 
C)  $85,500 $5,000 
D)  $85,500 $3,000 
E)  None of the above.

Question 15

Members of an affiliated group must share one $40,000 ____________________ for the tax year.

Accepted Answer

The answer of Members of an affiliated group must share...

Question 16

The Rub, Sal, and Ton Corporations file Federal income tax returns on a consolidated basis. The group's tax return currently is under audit. Under a valid tax-sharing agreement, each corporation is liable for one-third of the group's consolidated tax liability. The affiliates have agreed with the auditor that the group's unpaid liability for the year is $90,000. Because of an incorrect tax return position, another $3,000 in interest and a $1,800 penalty is attributable solely to Ton. At present, only Rub is solvent and has the cash with which to make such a tax payment. What is the maximum amount for which the government could be successful in forcing Rub to satisfy the outstanding liabilities of the consolidated group?

Accepted Answer

A)  $4,800. 
B)  $90,000. 
C)  $91,800. 
D)  $93,000. 
E)  $94,800. 
A)  $4,800. 
B)  $90,000. 
C)  $91,800. 
D)  $93,000. 
E)  $94,800.

Question 17

A wholly owned LLC can join the parent's consolidated group for book, but not for tax, purposes.

Accepted Answer

A) True 
 B)False

Question 18

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 U.S. corporation's § 401(k) plan. 
C)  A partnership organized in Germany. 
D)  A corporation that operates in seven different U.S. states. 
A)  A sole proprietor with annual sales of more than $50 million. 
B)  A U.S. corporation's § 401(k) plan. 
C)  A partnership organized in Germany. 
D)  A corporation that operates in seven different U.S. states.

Question 19

Conformity among the members of a consolidated group must be implemented for which of the following tax items?

Accepted Answer

A)  Use of foreign tax payments (i.e., as a credit or deduction). 
B)  Tax accounting method (i.e., cash or accrual). 
C)  Inventory accounting method (e.g., FIFO or LIFO). 
D)  Election to claim the § 179 depreciation expensing amount. 
E)  Tax year end. 
A)  Use of foreign tax payments (i.e., as a credit or deduction). 
B)  Tax accounting method (i.e., cash or accrual). 
C)  Inventory accounting method (e.g., FIFO or LIFO). 
D)  Election to claim the § 179 depreciation expensing amount. 
E)  Tax year end.

Question 20

Consolidated estimated tax payments must begin for the ____________________ (first, second, etc.) tax year after the group's election.
or

Accepted Answer

The answer of Consolidated estimated tax payments must begin for...

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

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

Which of the following is not generally a disadvantage of filing Federal corporate income tax returns on a consolidated basis?

If, on joining an affiliated group, SubCo has a different tax year than that of ParentCo, SubCo must switch its year-end to ParentCo's by the end of the ____________________ (first, second, etc.) tax year after the election to consolidate. or

In the year that the group terminates its consolidation election, a consolidated group's deferred gain from an intercompany asset sale between affiliates is recognized in full, under the ____________________ rule.

Which of the following items is not computed on a consolidated basis?

Most of the rules governing the use of consolidated returns are found in tax , and not the .

In the context of a Federal consolidated income tax return, describe the matching rule and the acceleration rule. The Regulations apply these rules to some of the intercompany transactions of an affiliated group.

Most of the Federal consolidated income tax return rules are found in detailed sections of the Internal Revenue Code.

The rules for computing Federal consolidated taxable income can differ a significant way from those governing financial reporting for conglomerates.

Tax incentives constitute the primary motivation for most corporations to form a conglomerate and file tax and financial accounting reports on a consolidated basis.

The starting point in computing consolidated taxable income is the separate Federal taxable income amounts of the affiliated group members.

ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's taxable income or loss computed on a separate basis. ParentCo SubCo

Members of an affiliated group must share one $40,000 ____________________ for the tax year.

A wholly owned LLC can join the parent's consolidated group for book, but not for tax, purposes.

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

Conformity among the members of a consolidated group must be implemented for which of the following tax items?

Consolidated estimated tax payments must begin for the ____________________ (first, second, etc.) tax year after the group's election. or

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings 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

Taxes on the Financial Statements

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

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

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

Which of the following is not generally a disadvantage of filing Federal corporate income tax returns on a consolidated basis?

If, on joining an affiliated group, SubCo has a different tax year than that of ParentCo, SubCo must switch its year-end to ParentCo's by the end of the ____________________ (first, second, etc.) tax year after the election to consolidate. or

In the year that the group terminates its consolidation election, a consolidated group's deferred gain from an intercompany asset sale between affiliates is recognized in full, under the ____________________ rule.

Which of the following items is not computed on a consolidated basis?

Most of the rules governing the use of consolidated returns are found in tax ____________________, and not the ____________________.

In the context of a Federal consolidated income tax return, describe the matching rule and the acceleration rule. The Regulations apply these rules to some of the intercompany transactions of an affiliated group.

Most of the Federal consolidated income tax return rules are found in detailed sections of the Internal Revenue Code.

The rules for computing Federal consolidated taxable income can differ a significant way from those governing financial reporting for conglomerates.

Tax incentives constitute the primary motivation for most corporations to form a conglomerate and file tax and financial accounting reports on a consolidated basis.

The starting point in computing consolidated taxable income is the separate Federal taxable income amounts of the affiliated group members.

ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's taxable income or loss computed on a separate basis. ParentCo SubCo

Members of an affiliated group must share one $40,000 ____________________ for the tax year.

A wholly owned LLC can join the parent's consolidated group for book, but not for tax, purposes.

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

Conformity among the members of a consolidated group must be implemented for which of the following tax items?

Consolidated estimated tax payments must begin for the ____________________ (first, second, etc.) tax year after the group's election. or

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings 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

Taxes on the Financial Statements

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

Most of the rules governing the use of consolidated returns are found in tax , and not the .