consolidated_taxable_income

consolidated_taxable_income - group this year Additional...

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Topic: Consolidated taxable income 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
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Unformatted text preview: 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). • Pluto received $25,000 in dividends from Saturn this year. • Pluto and Saturn made charitable contributions of $20,000 and $9,000, respectively, this year. • Pluto has an NOL carryforward of 10,000. Required: (a) Compute Pluto & Saturn’s separate taxable income. (b) Compute Pluto & Saturn’s consolidated income....
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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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