A b c d partnerships s corporations trusts and

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Unformatted text preview: The members reported the following taxable incomes (losses) for the year: ParentCo SubOne SubTwo $50,000 ($60,000) ($40,000) No member reported a capital gain or loss or charitable contributions. What is the amount of the consolidated net operating loss? a. b. c. d. $0 $30,000 $50,000 $100,000 CPA-05271 Explanation Choice "c" is correct. Net capital losses are not allowable deductions for corporations. A corporation can only use capital losses to offset capital gains. Further, the deduction for charitable contributions may be limited in some cases, and no charitable contribution deduction is allowed in calculating the NOL. The facts of this question indicate that there are no reported capital gains or losses or charitable contributions for any of the consolidated entities; therefore, we know that we are able to use the total income (loss) identified in the facts to calculate the net operating loss. When entities file consolidated income tax returns, 100% of their net income (losses) is consolidated. The facts do not indicate...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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