Question 1

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 charitable contributions. 
C)  Parent's dividends received deduction. 
D)  Subsidiary's operating income/loss. 
A)  Parent's operating income/loss. 
B)  Parent's charitable contributions. 
C)  Parent's dividends received deduction. 
D)  Subsidiary's operating income/loss. B

Question 2

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

Accepted Answer

A)  The consolidated ACE adjustment could be reduced for the filing group. 
B)  The taxation of intercompany dividends is not eliminated. Recognition of losses from certain intercompany transactions is deferred. 
C)  The tax basis of investments in the stock of subsidiaries is unaffected by members contributing to consolidated taxable income. 
D)  The § 1231 loss of one member is not offset against the § 1231 gain of another member of the group. 
A)  The consolidated ACE adjustment could be reduced for the filing group. 
B)  The taxation of intercompany dividends is not eliminated. Recognition of losses from certain intercompany transactions is deferred. 
C)  The tax basis of investments in the stock of subsidiaries is unaffected by members contributing to consolidated taxable income. 
D)  The § 1231 loss of one member is not offset against the § 1231 gain of another member of the group. B

Question 3

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return.
a. Advantage of consolidating
b. Disadvantage of consolidating
c. Neither an advantage nor a disadvantage
-Joint and several liability for Federal income tax

Accepted Answer

b

Question 4

A tax-exempt charitable trust, created by a U.S. C corporation, can join in a Federal consolidated return.

Accepted Answer

A) True 
 B)False

Question 5

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 dollar-cost averaging). 
D)  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 dollar-cost averaging). 
D)  Tax year-end.

Question 6

A Federal consolidated tax return group can apply the "relative taxable income" method as a means to apportion the tax liabilities of the members among the affiliates.

Accepted Answer

A) True 
 B)False

Question 7

ParentCo and SubOne have filed consolidated returns since 2012. SubTwo was formed in 2014 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 2015 net operating loss, how much of the 2015 consolidated net operating loss is carried back to offset prior years' income?

Accepted Answer

A)  $80,000 
B)  $40,000 
C)  $30,000 
D)  $0 
A)  $80,000 
B)  $40,000 
C)  $30,000 
D)  $0

Question 8

All affiliates joining in a newly formed consolidated return must consent to the election on Form 1122, as attached to the Form 1120 for the group.

Accepted Answer

A) True 
 B)False

Question 9

The calendar year parent and affiliates must elect to file on a consolidated basis by 15 after the first consolidated tax year.

Accepted Answer

March
September
Sept

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

ParentCo owned 100% of SubCo for the entire year, and both companies use the accrual method of tax accounting. During the year, SubCo purchased $20,000 of supplies from ParentCo. In addition, SubCo provided internal audit services to ParentCo, which were worth $40,000. Including these transactions, ParentCo's separate taxable income was $75,000, and SubCo's separate taxable income was $100,000. What is the group's consolidated taxable income for the year?

Accepted Answer

A)  $215,000 
B)  $195,000 
C)  $175,000 
D)  $155,000 
A)  $215,000 
B)  $195,000 
C)  $175,000 
D)  $155,000

Question 12

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.
a. Given the following information about the subsidiary's operating results, derive the requested amounts as of December 31 of each year. The group files using a calendar year.
   
b. LargeCo sold LittleCo to an unrelated competitor for $600,000 on December 31, Year 3. How will LargeCo account for this sale?

Accepted Answer

a. Year 1 Stock basis $275,000; excess l

Question 13

The Philstrom consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss (NOL) that is apportioned to Junior.

Accepted Answer

A)  $500,000. 
B)  $540,000. 
C)  $600,000. 
D)  $0. All NOLs of a consolidated group are apportioned to the parent. 
A)  $500,000. 
B)  $540,000. 
C)  $600,000. 
D)  $0. All NOLs of a consolidated group are apportioned to the parent.

Question 14

All members of an affiliated group have and liability for
each other's Federal income tax liabilities.

Accepted Answer

joint, sev

Question 15

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 to all of the entities.

Accepted Answer

Consolidated tax lia

Question 16

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return.
a. Advantage of consolidating
b. Disadvantage of consolidating
c. Neither an advantage nor a disadvantage
-Tax compliance deadlines and recordkeeping

Accepted Answer

The answer of Match each of the following terms with...

Question 17

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

Accepted Answer

A)  Allow unused charitable contributions a 20-year carryforward. 
B)  Disallow any carrybacks of NOL deductions. 
C)  Keep the consolidated group from benefiting when the election to consolidate is motivated chiefly by tax reduction strategies. 
D)  All of the above statements describe effects of the consolidated return rules. 
A)  Allow unused charitable contributions a 20-year carryforward. 
B)  Disallow any carrybacks of NOL deductions. 
C)  Keep the consolidated group from benefiting when the election to consolidate is motivated chiefly by tax reduction strategies. 
D)  All of the above statements describe effects of the consolidated return rules.

Question 18

A consolidated Federal income tax group must meet the eligibility requirements of the Regulations on the first day of the first year for which the election to consolidate is effective, and then on the last day of every succeeding tax year.

Accepted Answer

A) True 
 B)False

Question 19

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. 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 2014 consolidated loss:

Accepted Answer

A)  must be carried forward, unless an election to forgo carryforward is made by the parent. 
B)  must be carried back, unless an election to forgo the carryback is made by the parent. 
C)  can be used only to offset SubCo's future income. 
D)  cannot be used to offset any of ParentCo's 2012 income. 
A)  must be carried forward, unless an election to forgo carryforward is made by the parent. 
B)  must be carried back, unless an election to forgo the carryback is made by the parent. 
C)  can be used only to offset SubCo's future income. 
D)  cannot be used to offset any of ParentCo's 2012 income.

Question 20

Dividends paid out of a subsidiary's E & P to the parent cause a (positive/negative) adjustment to the parent's stock basis of the subsidiary.

Accepted Answer

The answer of Dividends paid out of a subsidiary's E...

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

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

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return. a. Advantage of consolidating b. Disadvantage of consolidating c. Neither an advantage nor a disadvantage -Joint and several liability for Federal income tax

A tax-exempt charitable trust, created by a U.S. C corporation, can join in a Federal consolidated return.

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

A Federal consolidated tax return group can apply the "relative taxable income" method as a means to apportion the tax liabilities of the members among the affiliates.

All affiliates joining in a newly formed consolidated return must consent to the election on Form 1122, as attached to the Form 1120 for the group.

The calendar year parent and affiliates must elect to file on a consolidated basis by 15 after the first consolidated tax year.

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

The Philstrom consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss (NOL) that is apportioned to Junior.

All members of an affiliated group have and liability for each other's Federal income tax liabilities.

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return. a. Advantage of consolidating b. Disadvantage of consolidating c. Neither an advantage nor a disadvantage -Tax compliance deadlines and recordkeeping

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

A consolidated Federal income tax group must meet the eligibility requirements of the Regulations on the first day of the first year for which the election to consolidate is effective, and then on the last day of every succeeding tax year.

Dividends paid out of a subsidiary's E & P to the parent cause a (positive/negative) adjustment to the parent's stock basis of the subsidiary.

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

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

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

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return. a. Advantage of consolidating b. Disadvantage of consolidating c. Neither an advantage nor a disadvantage -Joint and several liability for Federal income tax

A tax-exempt charitable trust, created by a U.S. C corporation, can join in a Federal consolidated return.

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

A Federal consolidated tax return group can apply the "relative taxable income" method as a means to apportion the tax liabilities of the members among the affiliates.

All affiliates joining in a newly formed consolidated return must consent to the election on Form 1122, as attached to the Form 1120 for the group.

The calendar year parent and affiliates must elect to file on a consolidated basis by 15 after the first consolidated tax year.

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

The Philstrom consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss (NOL) that is apportioned to Junior.

All members of an affiliated group have and liability for each other's Federal income tax liabilities.

Match each of the following terms with the appropriate description, in the context of a consolidated Federal income tax return. a. Advantage of consolidating b. Disadvantage of consolidating c. Neither an advantage nor a disadvantage -Tax compliance deadlines and recordkeeping

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

A consolidated Federal income tax group must meet the eligibility requirements of the Regulations on the first day of the first year for which the election to consolidate is effective, and then on the last day of every succeeding tax year.

Dividends paid out of a subsidiary's E & P to the parent cause a (positive/negative) adjustment to the parent's stock basis of the subsidiary.

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