Mako and Snufco Corporations Are Affiliated and Have Filed Consolidated

question 22

Multiple Choice

Mako and Snufco Corporations are affiliated and have filed consolidated returns for the first time in 2019. Mako acquired 100% of Zebco stock on January 1 of 2019, the date of Zebco's formation. Mako, Snufco, and Zebco, report the following taxable incomes for 2018 and 2019. $$\begin{array} { | c | c | c | } \hline \text { Corporation } & \text { Taxable Income } & \text { Taxable Income } \\& \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 9 } \\\hline \text { Mako } & \$ 18,000 & \$ 12,000 \\\text { Snufco } & 9,000 & 8,000 \\\text { Zebco } & ( 25,000 ) & 15,000 \\\hline\end{array}$$ How much of the 2018 Zebco NOL be used to offset CTI in 2019?

• A) $0
• B) $12,000
• C) $15,000
• D) $20,000

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Definitions:

Financing

The process of providing funds for business activities, making purchases, or investing.

Agreements of Purchase

Legal documents formalizing the terms and conditions under which goods, services, or property are bought and sold.

Terminated

Brought to an end or concluded, often referring to the conclusion of employment or the cessation of a contract or agreement.

Legal Action

The process of seeking resolution or enforcement of rights through judicial proceedings.