In the Current Year, Parent Corporation Provided Advertising Services to Its

question 107

Essay

In the current year, Parent Corporation provided advertising services to its 100%-owned subsidiary, SubCo, under a contract that requires no payments to Parent until next year. Both parties use the accrual method of tax accounting and a calendar tax year. The services that Parent rendered were valued at $250,000. In addition, Parent received $20,000 of interest payments from SubCo., relative to an arm's length note between them.
Including these transactions, Parent's taxable income for the year amounted to $400,000. SubCo reported $200,000 separate taxable income. Derive the group's consolidated taxable income, using the format of Exhibit 8.3. $$\begin{array}{l}\begin{array} { | l | | l | l | | l | | l | } \hline & \begin{array} { l } \text { Separate } \\\text { Taxable } \\\text { Income }\end{array} & \text { Adjustments } & \begin{array} { l } \text { Post- } \\\text { Adjustment } \\\text { Amounts }\end{array} \\\hline \hline \text { ParentCo Information } & & & \\\hline \hline \text { SubCo Information } & & & \\\hline \hline \begin{array} { l } \text { Group-Basis } \\\text { Transactions }\end{array} & & & \\\hline \hline \begin{array} { l } \text { Intercompany } \\\text { Events }\end{array} & & & \\\hline \hline \text { Consolidated } \\\text { Taxable Income } & & & \\\hline \hline\end{array}\\\text { NOTES }\end{array}$$

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