Parent and Subsidiary Corporations Form an Affiliated Group How Much of the Subsidiary Loss Can Be Carried Back

question 65

Multiple Choice

Parent and Subsidiary Corporations form an affiliated group. Last year, the initial year of operation, Parent and Subsidiary filed separate returns. This year. the group files a consolidated return. $$\begin{array} { | l | r | c | } \hline { \text { Taxable Incame } } \\\hline & { \text { Last } } & \text { Current } \\\hline \text { Parent } & ( \$ 16,000 ) & \$ 20,000 \\\hline \text { Subsidiary } & 10,000 & ( 21,000 ) \\\hline\end{array}$$ How much of the Subsidiary loss can be carried back to last year?

• A) $0
• B) $1,000
• C) $10,000
• D) none of the above

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Definitions:

Code and Restatement

Legal documents that systematically collect statutes, codes, or common law principles, simplifying and clarifying the law.

Donee Beneficiaries

Individuals or entities that receive benefits from a contract, though they are not one of the primary parties involved in the agreement.

Creditor Beneficiaries

Third parties that benefit from a contract between two other parties because one party promises to pay a debt owed to the beneficiary.

Incidental Beneficiaries

Individuals or entities that unexpectedly benefit from a contract, despite not being directly involved in its formulations.