Blue and Gold Corporations Are Members of the Blue-Gold Affiliated

question 78

Multiple Choice

Blue and Gold Corporations are members of the Blue-Gold affiliated group,which filed a consolidated tax return for last year,reporting a $200,000 consolidated NOL.Small taxable income amounts were reported by Blue and Gold in separate tax returns filed in years prior to last year.Early in the current year,100% of Blue's stock is purchased by Robert Martin who contributes additional funds to Blue Corporation sufficient to acquire all of Green Corporation's stock.For the current year,the affiliated group reports the following results (excluding the consolidated NOL deduction) : $$\begin{array} { | l | r | } \hline { \text { Corporation } } & \text { Taxable Income } \\\hline \text { Blue } & \$ 150,000 \\\hline \text { Gold } & ( 25,000 ) \\\hline \text { Green (since acquisition) } & 100,000 \\\hline\end{array}$$ Which of the following statements is correct?

• A)Last year's NOL cannot be carried back.
• B)The portion of last year's NOL that is not used as a carryback can be carried over the current year but is only used against Blue's taxable income.
• C)The portion of last year's NOL that is not used as a carryback can be carried over against the current consolidated taxable income,but is subject to the Sec.382 limitation.
• D)The portion of last year's NOL that is not used as a carryback can be carried over,but is used only against the Blue's and Gold's taxable income.

---

Definitions:

Swollen Region

A physically larger or expanded area, typically due to inflammation, fluid retention, or growth processes within biological contexts.

Stomata

Tiny openings or pores in plant tissue that allow for gas exchange.

Openings

Natural or artificial apertures or cavities that provide access or passage in biological and structural contexts.

Gases

State of matter consisting of particles that have neither a defined volume nor shape, often able to expand freely to fill any space.