ParentCo and SubOne Have Filed Consolidated Returns Since 2012

question 7

Multiple Choice

ParentCo and SubOne have filed consolidated returns since 2012. SubTwo was formed in 2014 through an asset spin-off from ParentCo. SubTwo has joined in the filing of consolidated returns since then. 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. If ParentCo does not elect to forgo the carryback of the 2015 net operating loss, how much of the 2015 consolidated net operating loss is carried back to offset prior years' income?

• A) $80,000
• B) $40,000
• C) $30,000
• D) $0

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Definitions:

Self-Serving Bias

The common human tendency to attribute positive events to their own character but attribute negative events to external factors.

Personal Experience

An individual’s direct observation or participation in events, forming the basis for knowledge, attitudes, or beliefs.

Inherited

The transfer of physical, genetic, or characteristic traits from parents to offspring through genes.

Innate

Qualities, abilities, or knowledge that are inborn or present naturally rather than acquired.