Question 1

Which of the following is eligible to file Federal income tax returns on a consolidated basis?

Accepted Answer

A)  U.S. corporation engaged in the oil and gas industry. 
B)  Japanese corporation engaged in multinational operations, including two-thirds of its activities in the U.S. 
C)  Japanese corporation engaged in multinational operations, including one-third of its activities in the U.S. 
D)  Limited liability company operating exclusively in Texas. 
A)  U.S. corporation engaged in the oil and gas industry. 
B)  Japanese corporation engaged in multinational operations, including two-thirds of its activities in the U.S. 
C)  Japanese corporation engaged in multinational operations, including one-third of its activities in the U.S. 
D)  Limited liability company operating exclusively in Texas.

Question 2

If the negative adjustments to the stock basis of the subsidiary exceed the positive adjustments plus the subsidiary stock basis at the beginning of the tax year, a(n) ____________________ account is created.

Accepted Answer

The answer of If the negative adjustments to the stock...

Question 3

Keep Corporation joined an affiliated group by merger. The group generated a 2011 consolidated NOL, and Keep's share of the loss was $50,000. Keep's share of the loss is included in the group's NOL carryforward to 2012.

Accepted Answer

A) True 
 B)False

Question 4

Within a Federal consolidated income tax group, SubOne ____________________ (can/cannot) use the LIFO inventory method at the same time that SubTwo uses dollar-cost averaging.

Accepted Answer

The answer of Within a Federal consolidated income tax group,...

Question 5

The parent computes a basis in the stock of its subsidiary that is part of a Federal consolidated tax return group. This stock basis cannot be a negative amount. Explain.

Accepted Answer

The parent's tax basis in the stock of t

Question 6

Except for the § 199 domestic production activities deduction (DPAD), the members of an electing affiliated group report the following data. Compute the group's DPAD for calendar tax year 2011.

Accepted Answer

The DPAD is computed at the group level,

Question 7

An affiliated group exists where there is ____________________ percent ownership of all of the affiliates within the group, and there is an identifiable ____________________ corporation.
or

Accepted Answer

80, parent

Question 8

Dividends paid by a subsidiary to the parent cause a ____________________ (positive/negative) adjustment to the parent's stock basis of the subsidiary.

Accepted Answer

The answer of Dividends paid by a subsidiary to the...

Question 9

A corporation organized outside of the U.S. can be included in a Federal consolidated return.

Accepted Answer

A) True 
 B)False

Question 10

In computing consolidated E & P, dividends paid to the parent by group members are ignored.

Accepted Answer

A) True 
 B)False

Question 11

ParentCo purchased 100% of SubCo's stock on January 1, 2011, and the companies have filed consolidated returns since then. 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 2012 net operating loss:

Accepted Answer

A)  may be carried back to offset SubCo's 2010 taxable income. 
B)  may be carried forward only and applied against group income if so elected by ParentCo. 
C)  cannot be carried back against 2010 SubCo income, as consolidated returns were not filed. 
D)  either a or b, but not both. 
A)  may be carried back to offset SubCo's 2010 taxable income. 
B)  may be carried forward only and applied against group income if so elected by ParentCo. 
C)  cannot be carried back against 2010 SubCo income, as consolidated returns were not filed. 
D)  either a or b, but not both.

Question 12

The right to file on a consolidated basis is available to a group of corporations when they constitute a "parent-subsidiary affiliated group."

Accepted Answer

A) True 
 B)False

Question 13

Over time, the consolidated return rules have shifted from penalizing joint filing to allowing a tax-neutral means by which to elect to file on a consolidated basis.

Accepted Answer

A) True 
 B)False

Question 14

In computing consolidated E & P, a negative adjustment is allowed for the group's Federal income tax payments.

Accepted Answer

A) True 
 B)False

Question 15

In computing consolidated taxable income, a charitable contribution is an example of a(n) ____________________ item.

Accepted Answer

The answer of In computing consolidated taxable income, a charitable...

Question 16

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.

Accepted Answer

A)  $91,000. 
B)  $100,800. 
C)  $112,000. 
D)  $122,000. 
A)  $91,000. 
B)  $100,800. 
C)  $112,000. 
D)  $122,000.

Question 17

The group of Parent Corporation, SubOne, and SubTwo has filed a consolidated return since 2010. The first two entities were incorporated in 2009, and SubTwo came into existence in 2010 through an asset spin-off from Parent. Taxable income computations for the members are shown below. None of the group members incurred any capital gain or loss transactions during 2009-2012, nor did they make any charitable contributions.
Describe the treatment of the group's 2011 consolidated NOL. Hint: Apply the offspring rule.
   * Consolidated return year.

Accepted Answer

Lacking an election by ParentCo to forgo

Question 18

Cooper Corporation joined the Duck consolidated Federal income tax return group, when Cooper held a $1 million NOL carryforward. In its first year as a part of the Duck group, Cooper generated a $150,000 NOL. For that year, Duck can deduct only $150,000 of Cooper's NOL in computing consolidated taxable income.

Accepted Answer

A) True 
 B)False

Question 19

The consolidated net operating loss of the Parent Group includes all of the following except:

Accepted Answer

A)  Parent's operating income/loss. 
B)  Parent's passive activity income/loss. 
C)  Parent's charitable contributions. 
D)  Subsidiary's operating income/loss. 
A)  Parent's operating income/loss. 
B)  Parent's passive activity income/loss. 
C)  Parent's charitable contributions. 
D)  Subsidiary's operating income/loss.

Question 20

Campbell Corporation left the Crane consolidated tax return group after the calendar 2011 tax year. Crane can add Campbell back to the consolidated group, but no earlier than for the 2017 tax year.

Accepted Answer

A) True 
 B)False

Which of the following is eligible to file Federal income tax returns on a consolidated basis?

If the negative adjustments to the stock basis of the subsidiary exceed the positive adjustments plus the subsidiary stock basis at the beginning of the tax year, a(n) ____________________ account is created.

Keep Corporation joined an affiliated group by merger. The group generated a 2011 consolidated NOL, and Keep's share of the loss was $50,000. Keep's share of the loss is included in the group's NOL carryforward to 2012.

Within a Federal consolidated income tax group, SubOne ____________________ (can/cannot) use the LIFO inventory method at the same time that SubTwo uses dollar-cost averaging.

The parent computes a basis in the stock of its subsidiary that is part of a Federal consolidated tax return group. This stock basis cannot be a negative amount. Explain.

Except for the § 199 domestic production activities deduction (DPAD), the members of an electing affiliated group report the following data. Compute the group's DPAD for calendar tax year 2011.

An affiliated group exists where there is percent ownership of all of the affiliates within the group, and there is an identifiable corporation. or

Dividends paid by a subsidiary to the parent cause a ____________________ (positive/negative) adjustment to the parent's stock basis of the subsidiary.

A corporation organized outside of the U.S. can be included in a Federal consolidated return.

In computing consolidated E & P, dividends paid to the parent by group members are ignored.

The right to file on a consolidated basis is available to a group of corporations when they constitute a "parent-subsidiary affiliated group."

Over time, the consolidated return rules have shifted from penalizing joint filing to allowing a tax-neutral means by which to elect to file on a consolidated basis.

In computing consolidated E & P, a negative adjustment is allowed for the group's Federal income tax payments.

In computing consolidated taxable income, a charitable contribution is an example of a(n) ____________________ item.

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.

The consolidated net operating loss of the Parent Group includes all of the following except:

Campbell Corporation left the Crane consolidated tax return group after the calendar 2011 tax year. Crane can add Campbell back to the consolidated group, but no earlier than for the 2017 tax year.

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

Which of the following is eligible to file Federal income tax returns on a consolidated basis?

If the negative adjustments to the stock basis of the subsidiary exceed the positive adjustments plus the subsidiary stock basis at the beginning of the tax year, a(n) ____________________ account is created.

Keep Corporation joined an affiliated group by merger. The group generated a 2011 consolidated NOL, and Keep's share of the loss was $50,000. Keep's share of the loss is included in the group's NOL carryforward to 2012.

Within a Federal consolidated income tax group, SubOne ____________________ (can/cannot) use the LIFO inventory method at the same time that SubTwo uses dollar-cost averaging.

The parent computes a basis in the stock of its subsidiary that is part of a Federal consolidated tax return group. This stock basis cannot be a negative amount. Explain.

Except for the § 199 domestic production activities deduction (DPAD), the members of an electing affiliated group report the following data. Compute the group's DPAD for calendar tax year 2011.

An affiliated group exists where there is ____________________ percent ownership of all of the affiliates within the group, and there is an identifiable ____________________ corporation. or

Dividends paid by a subsidiary to the parent cause a ____________________ (positive/negative) adjustment to the parent's stock basis of the subsidiary.

A corporation organized outside of the U.S. can be included in a Federal consolidated return.

In computing consolidated E & P, dividends paid to the parent by group members are ignored.

The right to file on a consolidated basis is available to a group of corporations when they constitute a "parent-subsidiary affiliated group."

Over time, the consolidated return rules have shifted from penalizing joint filing to allowing a tax-neutral means by which to elect to file on a consolidated basis.

In computing consolidated E & P, a negative adjustment is allowed for the group's Federal income tax payments.

In computing consolidated taxable income, a charitable contribution is an example of a(n) ____________________ item.

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.

The consolidated net operating loss of the Parent Group includes all of the following except:

Campbell Corporation left the Crane consolidated tax return group after the calendar 2011 tax year. Crane can add Campbell back to the consolidated group, but no earlier than for the 2017 tax year.

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

An affiliated group exists where there is percent ownership of all of the affiliates within the group, and there is an identifiable corporation. or