ParentCo and SubCo Have Filed Consolidated Returns Since Both Entities

question 19

Multiple Choice

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. The 2014 consolidated loss:

• A) must be carried forward, unless an election to forgo carryforward is made by the parent.
• B) must be carried back, unless an election to forgo the carryback is made by the parent.
• C) can be used only to offset SubCo's future income.
• D) cannot be used to offset any of ParentCo's 2012 income.

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Definitions:

Social Loafing

The phenomenon where individuals exert less effort on a task when working in a group compared to when working alone.

Production Matching

A cognitive process where individuals match new information with what they have previously learned or experienced.

Distraction

The process of diverting someone's attention from the intended object of focus to something else.

Social Identity Theory

A theory positing that an individual’s sense of who they are is based on their group membership(s), which shapes their behavior and attitudes.