CER - devry -Acct424_Quiz3

CER - devry -Acct424_Quiz3 - Grade Details 1...

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Grade Details 1. Question: (TCO 6) ParentCo's separate taxable income was $350,000, and SubCo's was $225,000. Consolidated  taxable income before contributions was $400,000.  Charitable contributions made by the affiliated group  included $15,000 by ParentCo and $20,000 by SubCo.  Compute the group's charitable contribution  deduction. Your Answer: $57,500. $40,000. $35,000. CORREC T $0. Some other amount Instructor Explanation: 10% X $400,000, but not to exceed the total gifts.   Points Received: 2 of 2 2. Question: (TCO 6) ParentCo purchased all of the stock of SubCo on January 2, 2007, and the two companies filed  consolidated returns for 2007 and thereafter.  Both entities were incorporated in 2006.  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.  No § 382 limit  applies. ParentCo’s SubCo’s Taxable Consolidated Year Taxable Income Income Taxable Income 2006 $100,000 ($175,000) N/A 2007 $100,000 ($50,000)
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$60,000 2008 $100,000  $20,000 ? 2009 $100,000  $100,000 ? To what extent can SubCo’s 2006 losses be used by the group in 2009? Your Answer: $175,000. $110,000. INCORRECT $70,000. CORRECT ANSWER $0. Some other amount. Instructor Explanation: The $50,000 2007 loss is absorbed in the current year against ParentCo’s  income.  Because the 2006 loss arose in a separate return year, its use as a deduction against group  income is limited to the lesser of SubCo’s current-year or cumulative positive contribution to consolidated  taxable income. SubCo’s cumulative contribution to consolidated taxable income was a $50,000 loss for 2007, a $30,000  loss as of 2008 (20067s $50,000 loss plus 2008’s $20,000 income) and $70,000 net income as of 2009  (the 2008 cumulative contribution of $30,000 loss plus 2009’s income of $100,000).  The $50,000 loss in 
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CER - devry -Acct424_Quiz3 - Grade Details 1...

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