consolidated_taxable_income_solution

consolidated_taxable_income_solution - Topic: Consolidated...

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Topic: Consolidated taxable income – SOLUTION Pluto Corporation owns 100% of Saturn Corporation. Pluto and Saturn file a consolidated tax return. Pluto and Saturn’s operating income (before any of the items listed below) is $90,000 and $81,000, respectively. The following information is needed to compute their separate taxable income: Three years ago, Pluto sold land held for investment purposes to Saturn at a $20,000 profit. Saturn sold the land (a Sec. 1231 asset) to an unrelated corporation this year for a $15,000 gain. Pluto sold inventory to Saturn last year for which the deferred intercompany profit at the beginning of the year was $30,000. All of the inventory was sold outside the affiliated group this year. Additional inventory was sold by Pluto to Saturn this year. Some of this inventory remained unsold at year-end. The intercompany profit on the unsold inventory is $40,000. Saturn received an $8,000 dividend from Moon Corporation (less than 20% ownership).
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This note was uploaded on 09/09/2011 for the course TAX 5015 taught by Professor Kelliher,c during the Spring '08 term at University of Central Florida.

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consolidated_taxable_income_solution - Topic: Consolidated...

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