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Acct424_quiz3 - INCORRECT Instructor Explanation A net...

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5 . Question: (TCO 6) ParentCo and SubCo have filed consolidated returns since both  entities were incorporated in 20X1.  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. ParentCo’s SubCo’s Taxable Consolidated Year Taxable Income Income Taxable Income 20x1 $100,000  $35,000 $135,000 20x2 $100,000 ($20,000) $ 80,000 20x3 $100,000 ($109,000) ? 20x3 $100,000  $190,000 ? Th e 2008 consolidated loss: Your Answer: must be carried forward before it can be carried  back. must be carried forward, unless an election to  forgo carryforward is made by the parent. must be carried back, unless an election to  forgo the carryback is made by the parent. CORRECT ANSWER can only be used to offset SubCo’s future  income. cannot be used to offset any of ParentCo’s 20x1  income.
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Unformatted text preview: INCORRECT Instructor Explanation: A net operating loss arising in a consolidated return year must first be carried back two years (starting with the earliest year), and thereafter, if not completely absorbed, may be carried forward. However, the parent can elect to forgo any carryback, and thus carry the loss forward. The use of the 20x3 loss is not limited to SubCo, since the companies have filed consolidated returns for all years of their existence. Points Received: 0 of 2 6 . Question: (TCO 5) Which type of reorganization can be used to divide a corporation? Your Answer: Type A. Type B. Type D. CORREC T Type E. All of the above. Instructor Explanation: The “Type D” reorganization is typically used to divide a corporation although it can be used to acquire another corporation. Points Received: 2 of 2...
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Acct424_quiz3 - INCORRECT Instructor Explanation A net...

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