Prentice Hall's Federal Taxation 2014 Corporations, 27e Chapter 8

Prentice Hall's Federal Taxation 2014 Corporations, 27e
Chapter C8 Consolidated Tax Returns

1) To be an affiliated group, the parent corporation must directly own at least 80% of another group member.
Answer: TRUE
Page Ref.: C:8-2
Objective: 1

2) A Canadian subsidiary cannot file as part of the consolidated group with its U.S. parent.
Answer: FALSE
Page Ref.: C:8-5 through C:8-6
Objective: 1

3) Brother-sister controlled groups can elect to file a consolidated tax return.
Answer: FALSE
Page Ref.: C:8-4
Objective: 1
4) An advantage of filing a consolidated return is that losses of one affiliated group member may be offset against the taxable income of other group members in the same tax year.
Answer: TRUE
Page Ref.: C:8-36
Objective: 8

5) The election to file a consolidated return is made annually.
Answer: FALSE
Page Ref.: C:8-5
Objective: 2

6) A separate return year is a corporation's tax year for which it files a separate tax return or files a consolidated tax return with another affiliated group.
Answer: TRUE
Page Ref.: C:8-5
Objective: 2

7) P and S are members of an affiliated group that has filed consolidated tax returns for a number of years. The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.
Answer: TRUE
Page Ref.: C:8-18
Objective: 2

8) Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.
Answer: TRUE
Page Ref.: C:8-21
Objective: 4

9) A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.
Answer: TRUE
Page Ref.: C:8-30
Objective: 6

10) The treatment of capital loss carrybacks and carryovers is similar to NOLs.
Answer: TRUE
Page Ref.: C:8-28
Objective: 5

11) The IRS can attempt to collect taxes owed on a consolidated return from any of