Which of the Following Statements Is False Regarding Consolidated Tax

question 61

Multiple Choice

Which of the following statements is false regarding consolidated tax returns?

• A)An affiliated group can file a consolidated tax return only if it elects to do so.
• B)To file a consolidated tax return, one corporation must own at least 50 percent of the stock of another corporation.
• C)For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member.
• D)For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group.

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Definitions:

Incremental Analysis

The process of evaluating the financial consequences of choosing one option over another in decision-making.

Differential Analysis

The process of comparing the financial differences between alternative business actions in order to make informed decisions.

CVP Analysis

Cost-Volume-Profit Analysis, a financial tool used to estimate how changes in costs, sales volume, and price affect a company's profit.

Incremental Analysis

The process of comparing the additional costs and benefits of a decision to determine if it is worthwhile.