ParentCo Owned 100% of SubCo for the Entire Year

question 125

Multiple Choice

ParentCo owned 100% of SubCo for the entire year. ParentCo uses the accrual method of tax accounting whereas SubCo uses the cash method. During the year, SubCo sold raw materials to ParentCo for $35,000 under a contract that requires no payment to SubCo until the following year. Exclusive of this transaction, ParentCo had income for the year of $30,000, and SubCo had income of $50,000. The group's consolidated taxable income for the year was:

• A) $165,000.
• B) $150,000.
• C) $115,000.
• D) $80,000.

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Definitions:

Fixated

Showing an obsessive or persistent attachment to someone or something, or remaining in an immature psychological development stage.

Freud's Theory

A set of psychoanalytic theories proposed by Sigmund Freud, focusing on unconscious desires, childhood experiences, and stages of psychosexual development.

Lagging Behind

The state or condition of being slower than desired or expected, often used in educational or developmental contexts.

Processes

Encompasses a series of actions, changes, or functions that bring about a result or accomplish an objective.