Question 1

List three "intercompany transactions" of a Federal consolidated income tax group. ParentCo owns all of the stock of both SubOne and SubTwo.

Accepted Answer

Illustrative intercompany transactions i

Question 2

ParentCo's controlled group includes the following members. ParentCo owns all of the stock in each of the listed entities. Which entities can join ParentCo in a consolidated return?

Accepted Answer

ParentCo can include only its

Question 3

ParentCo owned 100% of SubCo for the entire year. ParentCo uses the accrual method of tax accounting, whereas SubCo uses the cash method. During the year, SubCo sold raw materials to ParentCo for $35,000 under a contract that requires no payment to SubCo until the following year. Exclusive of this transaction, ParentCo had income for the year of $30,000, and SubCo had income of $50,000. The group's consolidated taxable income for the year was:

Accepted Answer

A)  $165,000. 
B)  $150,000. 
C)  $115,000. 
D)  $80,000. 
A)  $165,000. 
B)  $150,000. 
C)  $115,000. 
D)  $80,000.

Question 4

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 5

ParentCo, SubOne and SubTwo have filed consolidated returns since 2011. All of the entities were incorporated in 2010. 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.   How should the 2012 consolidated net operating loss be apportioned among the group members?
ParentCo SubOne SubTwo

Accepted Answer

A)  $60,000 $ 0 $ 0 
B)  $20,000 $20,000 $20,000 
C)  $ 0 $20,000 $40,000 
D)  $ 0 $40,000 $20,000 
A)  $60,000 $ 0 $ 0 
B)  $20,000 $20,000 $20,000 
C)  $ 0 $20,000 $40,000 
D)  $ 0 $40,000 $20,000

Question 6

When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary can join the consolidated financial statements, but not the consolidated tax return of the parent.

Accepted Answer

A) True 
 B)False

Question 7

A Federal consolidated group can claim a dividends received deduction for payments that the parent receives from other affiliates.

Accepted Answer

A) True 
 B)False

Question 8

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)  $82,800 $33,000 
B)  $78,300 $30,600 
C)  $80,000 $33,000 
D)  $81,000 $33,000 
E)  $82,800 $30,600 
A)  $82,800 $33,000 
B)  $78,300 $30,600 
C)  $80,000 $33,000 
D)  $81,000 $33,000 
E)  $82,800 $30,600

Question 9

In computing consolidated taxable income, the purchase of database services by Subsidiary from Parent is an example of a(n) ____________________ transaction.

Accepted Answer

The answer of In computing consolidated taxable income, the purchase...

Question 10

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)  $81,000 $21,000 
B)  $81,000 $22,000 
C)  $70,000 $22,000 
D)  $70,000 $21,000 
A)  $81,000 $21,000 
B)  $81,000 $22,000 
C)  $70,000 $22,000 
D)  $70,000 $21,000

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

Accepted Answer

The major filing req

Question 13

Consolidated group members each must use the same tax year end.

Accepted Answer

A) True 
 B)False

Question 14

In computing consolidated taxable income, cost of goods sold is removed from the taxable incomes of the group members and determined on a group basis.

Accepted Answer

A) True 
 B)False

Question 15

A Federal consolidated tax return group commonly applies the "relative tax liability" method as a means to apportion the tax liabilities of the members among the affiliates.

Accepted Answer

A) True 
 B)False

Question 16

The capital 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.

Accepted Answer

The answer of The capital gain/loss of the affiliates is...

Question 17

How many consolidated tax returns are filed annually? What types of taxpayer do they represent?

Accepted Answer

Of the over 5.9 million corporations org

Question 18

Which of the following tax effects becomes more restrictive if an election is made to file a group's Federal corporate income tax returns on a consolidated basis?

Accepted Answer

A)  Choice of members' tax year ends. 
B)  Use of the lower tax rate brackets. 
C)  Use of the $40,000 AMT exemption. 
D)  Choice of members' tax accounting methods 
A)  Choice of members' tax year ends. 
B)  Use of the lower tax rate brackets. 
C)  Use of the $40,000 AMT exemption. 
D)  Choice of members' tax accounting methods

Question 19

A penalty can be assessed by the IRS if the parent corporation does not keep good records to support the computation of a subsidiary's stock basis.

Accepted Answer

A) True 
 B)False

Question 20

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

Accepted Answer

The initial basis of the subsidiary is r

List three "intercompany transactions" of a Federal consolidated income tax group. ParentCo owns all of the stock of both SubOne and SubTwo.

ParentCo's controlled group includes the following members. ParentCo owns all of the stock in each of the listed entities. Which entities can join ParentCo in a consolidated return?

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

When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary can join the consolidated financial statements, but not the consolidated tax return of the parent.

A Federal consolidated group can claim a dividends received deduction for payments that the parent receives from other affiliates.

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

In computing consolidated taxable income, the purchase of database services by Subsidiary from Parent is an example of a(n) ____________________ transaction.

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

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

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

Consolidated group members each must use the same tax year end.

In computing consolidated taxable income, cost of goods sold is removed from the taxable incomes of the group members and determined on a group basis.

A Federal consolidated tax return group commonly applies the "relative tax liability" method as a means to apportion the tax liabilities of the members among the affiliates.

The capital 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.

How many consolidated tax returns are filed annually? What types of taxpayer do they represent?

Which of the following tax effects becomes more restrictive if an election is made to file a group's Federal corporate income tax returns on a consolidated basis?

A penalty can be assessed by the IRS if the parent corporation does not keep good records to support the computation of a subsidiary's stock basis.

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

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

List three "intercompany transactions" of a Federal consolidated income tax group. ParentCo owns all of the stock of both SubOne and SubTwo.

ParentCo's controlled group includes the following members. ParentCo owns all of the stock in each of the listed entities. Which entities can join ParentCo in a consolidated return?

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

When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary can join the consolidated financial statements, but not the consolidated tax return of the parent.

A Federal consolidated group can claim a dividends received deduction for payments that the parent receives from other affiliates.

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

In computing consolidated taxable income, the purchase of database services by Subsidiary from Parent is an example of a(n) ____________________ transaction.

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

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

When a corporate group elects to file Federal income tax returns on a consolidated basis, it is subject to several tax return filing requirements for its first and subsequent tax years. List the most important of those requirements.

Consolidated group members each must use the same tax year end.

In computing consolidated taxable income, cost of goods sold is removed from the taxable incomes of the group members and determined on a group basis.

A Federal consolidated tax return group commonly applies the "relative tax liability" method as a means to apportion the tax liabilities of the members among the affiliates.

The capital 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.

How many consolidated tax returns are filed annually? What types of taxpayer do they represent?

Which of the following tax effects becomes more restrictive if an election is made to file a group's Federal corporate income tax returns on a consolidated basis?

A penalty can be assessed by the IRS if the parent corporation does not keep good records to support the computation of a subsidiary's stock basis.

Discuss how a parent corporation computes its stock basis for a subsidiary that joins in a Federal consolidated income tax return.

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