Key and Glass Corporations Were Organized Last Year

question 13

Multiple Choice

Key and Glass Corporations were organized last year.They became an affiliated group and filed separate tax returns.This year,the corporations begin filing a consolidated tax return.Key and Glass report the following results:

Which of the following statements is not correct?

• A)Key's last year NOL cannot offset Glass's last year profits.
• B)Key's last year NOL cannot offset this year's consolidated taxable income.
• C)Key's current year income must first be offset by Glass's current year loss.
• D)Glass cannot carry its current year loss back against last year's income.

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Definitions:

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Average Fixed Cost

Production costs that stay unchanged with output levels, split by the amount of produced output.

Total Revenue

The cumulative revenue a business earns from its sales or service provisions in a given timeframe.

Total Cost

The aggregate cost of all inputs used in the production of goods or services, including fixed and variable costs.