C10-Chp-00-Tst-3-Exm-Prb-Night Test No 3-March-3-2010

C10-Chp-00-Tst-3-Exm-Prb-Night Test No 3-March-3-2010 -...

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1452ae5abe97fd7d563e31d9638ace003b1d8b40.doc. Page 1 of 4 Accounting 6120. Corporate Taxation – Examination no. 3-Night Class Spring, 2010. The University of North Carolina at Charlotte Name________________________________________________ Row In Class__________ Instructions : You may use your code and regs book during the test. You may also use up to 8 pages of notes, as well as any outlines of code provided by the instructor in class or on the web page. You may not use your regular tax textbook when answering questions on this test. If you see any sign of impropriety, please prepare an anonymous note and slide it under the instructor's office door. Please turn in both the test and the computer answer sheet. Be sure to complete the name and row lines above. On your Opscan Sheet , your Student ID Number is entered as your "Identification Number." Your test number is entered in the "special codes" area, right justified. Your test number is written in red at the top of this test. 1 Consolidated returns may be filed by a. Either by parent-subsidiary corporations or by brother-sister corporations. b. Only by corporations that formally request advance permission from the IRS. c. Two corporations when the first one owns at least: 80% of the stock of the voting power of the second corporation and 80% of the value of the stock of the second corporation. d. Two corporations when the first one owns at least: 51% of the stock of the voting power of the second corporation and 51% of the value of the stock of the second corporation. 2 In 2009, Parent bought all of the stock of Local Corporation, which continued to operate as a subsidiary of Parent. They have provided the following partially completed worksheet for computation of consolidated taxable income. The two corporations have not had capital gains or losses or Section 1231 gains or losses before 2010. Year - 2010 Parent Local Corp. Consolidated Gross income from operations 300,000 200,000 Interest income 17,000 MACRS depreciation (22,000) (5,000) Other deductible operating expenses (200,000) (203,000) Separate taxable income 95,000 (8,000) Capital gain 50,000 Section 1231 loss (80,000) Consolidated taxable income What is consolidated taxable income? a. $77,000 b. $57,000 c. $95,000 d. $87,000 3 With regard to consolidated tax returns, which of the following statements is correct? a. Capital losses of one group member must not be used to offset capital gains of the other members included in the consolidated return b. Only corporations that issue their audited financial statements on a consolidated basis may file consolidated returns. c. All intercompany dividends paid by the subsidiaries to the parent are excludable from taxable income on the consolidated return. d. Charitable contributions made during the tax year by the members of the consolidated group are combined on the consolidated return and are deducted without limit to get consolidated taxable income.
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