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Question;722.TF #1;Tax incentives constitute the primary motivation for most corporations to form;a conglomerate and file tax and financial accounting reports on a consolidated;basis.;a.;True;b. False;723.TF #2;A consolidated Federal income tax return may be the product of a merger of the;affiliates, or of some other tax-favored reorganization.;a.;True;b. False;724.TF #3;Over time, the consolidated return rules have shifted from penalizing joint;filing to allowing a tax-neutral means by which to elect to file on a;consolidated basis.;a.;True;b. False;725.TF #4;Most of the Federal consolidated income tax return rules are found in detailed;sections of the Internal Revenue Code.;a.;True;b. False;726.TF #5;The rules for computing Federal consolidated taxable income can differ a;significant way from those governing financial reporting for conglomerates.;a.;True;b. False;727.TF #6;For consolidated tax return purposes, goodwill is amortized as a deduction to;taxable income. Under financial accounting rules, no such amortization is;allowed.;a.;True;b. False;728.TF #7;A wholly owned LLC can join the parent?s consolidated group for book, but not;for tax, purposes.;a.;True;b. False;729.TF #8;After a takeover, the parent takes a fair market value cost basis in the;subsidiary, for both book and tax purposes.;a.;True;b. False;730.TF #9;When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary;can join the consolidated financial statements, but not the consolidated tax;return of the parent.;a.;True;b. False;731.TF #10;A consolidated Federal income tax group must meet the eligibility requirements;of the Regulations only on the first day of the first year for which the;election to consolidate is effective.;a.;True;b. False;732.TF #11;The right to file on a consolidated basis is available to a group of;corporations when they constitute a ?parent-subsidiary affiliated group.?;a.;True;b. False;733.TF #12;A Federal consolidated group can claim a dividends received deduction for;payments that the parent receives from other affiliates.;a.;True;b. False;734.TF #13;In an affiliated group, the parent must own at least 50 percent of each of the;subsidiaries.;a.;True;b. False;735.TF #14;A C corporation must leave the consolidated group if it is restructured as an;LLC.;a.;True;b. False;736.TF #15;A corporation organized outside of the U.S. can be included in a Federal;consolidated return.;a.;True;b. False;737.TF #16;A tax-exempt hospital cannot join in a consolidated return.;a.;True;b. False;738.TF #17;A joint venture, taxed like a partnership, can join in a consolidated Federal;income tax return.;a.;True;b. False;739.TF #18;A group?s election to file consolidated Federal corporate income tax returns;must be made by the extended due date of the first return on which the;consolidation is applied.;a.;True;b. False;740.TF #19;Campbell Corporation left the Crane consolidated tax return group after the;calendar 2011 tax year. Crane can add Campbell back to the consolidated group;but no earlier than for the 2017 tax year.;a.;True;b. False;741.TF #20;The calendar-year Sterling Group files its Federal corporate income tax return;on a consolidated basis. Its Form 1120 is due on March 15, or September 15 if;an extended due date is approved by the IRS.;a.;True;b. False;742.TF #21;All affiliates joining in a newly formed consolidated return must consent to;the election on Form 1122, as attached to the tax return for the group.;a.;True;b. False;743.TF #22;Consolidated group members each are jointly and severally liable for the entire;consolidated income tax liability.;a.;True;b. False;744.TF #23;With the filing of its first consolidated return, a Federal consolidated group;makes an irrevocable election as to how it will allocate a tax year?s income;tax liability among the group members.;a.;True;b. False;745.TF #24;A Federal consolidated tax return group commonly applies the ?relative tax;liability? method as a means to apportion the tax liabilities of the members;among the affiliates.;a.;True;b. False;746.TF #25;Each of the members of a Federal consolidated tax return group can claim its;own $40,000 AMT exemption, subject to phase-out.;a.;True;b. False;747.TF #26;Consolidated group members each must use the same tax year end.;a.;True;b. False;748.TF #27;When the net accumulated taxable losses of a subsidiary exceed the parent?s;acquisition price, the parent?s basis in the subsidiary?s stock becomes;negative.;a.;True;b. False;749.TF #28;If subsidiary stock is redeemed or sold outside the group when an excess loss;account exists, the selling parent corporation recognizes capital gain income;equal to the account balance.;a.;True;b. False;750.TF #29;In computing consolidated E & P, dividends paid to the parent by group;members are ignored.;a.;True;b. False;751.TF #30;In computing consolidated E & P, a negative adjustment is allowed for the;group?s Federal income tax payments.;a.;True;b. False;752.TF #31;In computing consolidated taxable income, the domestic production activities;deduction (DPAD) is removed from the taxable incomes of the group members and;determined on a group basis.;a.;True;b. False;753.TF #32;In computing consolidated taxable income, cost of goods sold is removed from;the taxable incomes of the group members and determined on a group basis.;a.;True;b. False;754.TF #33;In computing consolidated taxable income, ? 1231 gains and losses are removed;from the taxable incomes of the group members and determined on a group basis.;a.;True;b. False;755.TF #34;The starting point in computing consolidated taxable income is the separate;Federal taxable income amounts of the affiliated group members.;a.;True;b. False;756.TF #35;An example of an intercompany transaction is the use of the financial;accounting software of the parent corporation by a subsidiary for an arm?s;length management fee.;a.;True;b. False;757.TF #36;When a subsidiary sells to the parent some business-use property that has;appreciated from its $20,000 basis to a $50,000 fair market value, the;subsidiary immediately recognizes $30,000 ordinary income on the consolidated;return.;a.;True;b. False;758.TF #37;Lacking elections to the contrary, Federal consolidated NOLs are carried back;two years and then forward twenty years.;a.;True;b. False;759.TF #38;When a consolidated NOL is generated, each affiliate is allocated a share of;the loss.;a.;True;b. False;760.TF #39;Keep Corporation joined an affiliated group by merger in 2011. The group;generated a consolidated 2011 NOL, and Keep?s share of the loss was $50,000.;Lacking an election by the parent to the contrary, Keep can carry the loss back;to its separate 2009 return, and the parent can claim a tax refund.;a.;True;b. False;761.TF #40;Keep Corporation joined an affiliated group by merger. The group generated a;2011 consolidated NOL, and Keep?s share of the loss was $50,000. Keep?s share;of the loss is included in the group?s NOL carryforward to 2012.;a.;True;b. False;762.TF #41;When a member departs a consolidated group, it forfeits the use of any NOLs it;generated while in the group.;a.;True;b. False;763.TF #42;Cooper Corporation joined the Duck consolidated Federal income tax return;group, when Cooper held a $1 million NOL carryforward. In its first year as a;part of the Duck group, Cooper generated a $150,000 NOL. For that year, Duck;can deduct only $150,000 of Cooper?s NOL in computing consolidated taxable;income.;a.;True;b. False;764.TF #43;Cooper Corporation joined the Duck consolidated Federal income tax return;group, when Cooper held a $1 million NOL carryforward. In its first year as a;part of the Duck group, Cooper generated a $150,000 taxable profit. For that;year, Duck can deduct up to $150,000 of Cooper?s NOL in computing consolidated;taxable income.;a.;True;b. False;765.TF #44;The losses of a consolidated group member are subject to both the SRLY rules;and a ? 382 limitation. When both limitations apply, the SRLY rules override;the ? 382 restrictions for this affiliate.;a.;True;b. False;766.TF #45;An affiliated group aggregates its separate charitable contributions;deductions for which then are subject to an annual limitation of 10% of;consolidated taxable income.;a.;True;b. False;767.TF #46;The domestic production activities deduction of a consolidated group can be;greater than the sum of the deductions of the group members when filing;separately.;a.;True;b. False;768.TF #47;A penalty can be assessed by the IRS if the parent corporation does not keep;good records to support the computation of a subsidiary?s stock basis.;a.;True;b. False


Paper#59225 | Written in 18-Jul-2015

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