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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 company transactions exist; therefore, there are no elimination entries to make before consolidating the
net income (loss). The consolidated net operating loss is calculated as follows:
ParentCo. $ 50,000 SubOne (60,000) SubTwo (40,000)
$(50,000) NOL Choice "a" is incorrect. A consolidated net loss of $50,000 exists, as calculated above.
Choice "b" is incorrect. A consolidated net loss of $50,000 exists, as calculated above.
Choice "d" is incorrect. The income from ParentCo. ($50,000) is netted with the losses from the
subsidiaries ($100,000) to arrive at the consolidated net operating loss of $50,000. CPA-05281 Type1 M/C A-D Corr Ans: C PM#105 R 3-01 72. CPA-05281 Released 2006 Page 19
Which of the following types of entities is entitled to the net operating loss deduction?
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- The Land, Taxation in the United States, Educational Development Corp, Type1 M/C, Corr Ans