ParentCo, SubOne and SubTwo Have Filed Consolidated Returns Since Year

question 150

Multiple Choice

ParentCo, SubOne and SubTwo have filed consolidated returns since Year 2. All of the entities were incorporated in Year 1. Taxable income computations for the members include the following. None of the group members incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. $$\begin{array} { c c c c c } & \text { ParentCo's } & \text { SubOne's Taxable } & \text { SubTw o's Taxable } & \text { Consolidated } \\\text { Year } & \text { Taxable Income } & \text { Income } & \text { Income } & \text { Taxable Income } \\\text { Year 1 } & \$ 200,000 & \$ 50,000 & \$ 150,000 & \text { N/A } \\\text { Year 2 } & \$ 200,000 & ( \$ 60,000 ) & \$ 70,000 & \$ 210,000 \\\text { Year 3 } & \$ 20,000 & ( \$ 60,000 ) & ( \$ 40,000 ) & ? \\\text { Year 4 } & \$ 200,000 & \$ 130,000 & \$ 10,000 & ?\end{array}$$ How should the Year 3 consolidated net operating loss be apportioned among the group members? ParentCo SubOne SubTwo

• A)$80,000 $ 0 $ 0
• B)$ 0 $60,000 $40,000
• C)$ 0 $40,000 $40,000
• D)$ 0 $48,000 $32,000

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