C12-Chp-08-1-Consol-Tax-Acctg-2012

C12-Chp-08-1-Consol-Tax-Acctg-2012 -...

Info icon This preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 8. Consolidations and related topics C11-Chp-08-1-Consol-Tax-Acctg-2011.PPT Howard Godfrey, Ph.D., CPA Professor of Accounting Copyright Howard Godfrey, 2011.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 1. Determine whether a group of corporations is a brother-sister group. (Must rely on code and this pp file). 2. Income tax for brother-sister group. (Chap 2, Pg. 21) 3. Determine whether a group of corporations are an affiliated group. (Pg. 8) 4. Determine whether a group of corporations is a parent- subsidiary controlled group. (Pg. 12). 5. Determine whether a group of corps can file a consolidated return. (Pg. 12) 6. Explain the procedures for making an initial consolidated return election. (Pg. 13, 18+) 7. What is the matching rule? (Pg. 29) 8. Advantages of a consolidated tax return. (Pg. 15, 31) 9. How are intercompany dividends handled on a consolidated return?(Pg. 21) 10.What is the amount of the dividend received deduction if a consolidated return is not filed ? (Pg. 31)
Image of page 2
3 What is a controlled group? What are tax consequences of being a controlled group? (Sec. 1561, 1563)
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 Sue owns 100% of these corps. Dream Magic Home, Inc. Lawn, Inc. Revenue $800,000 $200,000 Expenses 750,000 170,000 Tax. Income $50,000 $30,000 Type of controlled group? 1563. What is combined tax liability? $12,000 b. $15,000 c. $15,450 Controlled Corporations
Image of page 4
5 Dream Total Allocate Rate Tax Layer 1 $50,000 $25,000 15% $3,750 Layer 2 $25,000 $12,500 25% $3,125 Layer 3 $25,000 $12,500 34% $4,250 Total $50,000 $11,125 Magic Layer 1 $50,000 $25,000 15% $3,750 Layer 2 $25,000 $5,000 25% $1,250 Layer 3 $25,000 $0 34% $0 Total $30,000 $5,000 Would you allocate differently?
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
6 Controlled Groups of Corporations. Special tax rules apply to corps that are under common control to prevent them from being used to avoid taxes that would otherwise be due. A. Why Special Rules Are Needed. Multiple corporations could be used to avoid having corporate income taxed at a 35% rate. The entire group of corporations must share the benefits of the progressive tax rate schedule and pay any surcharge on the combined taxable income of the group. B. What Is a Controlled Group? A controlled group is a group of two or more corporations that are owned directly or indirectly by the same shareholder or group of shareholders.
Image of page 6
7 Parent-Subsidiary Controlled Groups. A parent-subsidiary controlled group is a group of two or more corporations where one corporation (the parent) owns directly at least 80% of the voting power of all classes of voting stock, or 80% of the total value of all classes of stock of a second corporation. There can be more than one subsidiary in the group. If the parent and/or a subsidiary own in total 80% of the voting power of all classes of voting stock, or 80% of the total value of all classes of stock of another corporation, that corporation is included in the controlled group.
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
8 Determine whether a group of corporations is a brother-sister group.
Image of page 8
9 Brother-Sister Controlled Groups. A group of two or more corporations is a brother- sister controlled group if five or fewer individuals, trusts, or estates own (1) At least 80% of the voting power of all classes of voting stock (or at least 80% of the total value of the outstanding stock) of each corporation, and (2) more than 50% of the voting power of all
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern