Which of the Following Is Not an Advantage of Filing

question 74

Multiple Choice

Which of the following is not an advantage of filing a consolidated income tax return?

• A) The existence of deferred losses in ending inventory.
• B) The ability to use net operating losses of one company to offset profits of another company.
• C) The existence of intra-entity gross profit remaining in ending inventory.
• D) Transfers of inventory at a transfer price above cost.
• E) There is no difference between U.S. GAAP and tax accounting rules for dividends paid to a parent by an 85%-owned subsidiary.

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Definitions:

AGI

Adjusted Gross Income, which is total income adjusted by certain allowable deductions, serving as the base for calculating taxable income.

Qualifying Expenses

Expenses that are determined to be necessary and deductible under tax law for various benefits like education savings accounts or business expenses.

Child and Dependent

Terms used in tax law to refer to individuals for whom the taxpayer provides more than half of financial support, qualifying the taxpayer for certain deductions.

Care Expense Credit

A tax credit available for expenses incurred in caring for a qualifying individual to allow the taxpayer to work or look for work.