Which of the Following Is Not Generally a Disadvantage of Filing

question 25

Multiple Choice

Which of the following is not generally a disadvantage of filing Federal corporate income tax returns on a consolidated basis?

• A) Net capital losses from one affiliate can offset the capital gains from another. This can reduce the tax liabilities of the group as a whole.
• B) Realized losses from transactions between affiliates are not recognized immediately.
• C) Compliance costs usually are higher when a consolidation election is in effect.
• D) The election generally is binding for future tax years.

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Definitions:

Grows

an increase in size, number, value, or strength.

Investment

Allocating financial resources with the aim of generating revenue or gains.

Interest

A charge for borrowed money, generally a percentage of the amount borrowed.

Simple Interest Rate

A method of calculating interest where the charge is based only on the original principal, not on the accumulated interest.