SubCo Sells an Asset to ParentCo at a Realized Gain

question 4

Multiple Choice

SubCo sells an asset to ParentCo at a realized gain. While ParentCo still holds the asset, SubCo leaves the consolidated group. As a result:

• A) The gain never is recognized.
• B) SubCo recognizes the gain on its first tax return after leaving the group.
• C) The group recognizes the gain under the related party rules.
• D) The group recognizes the gain under the acceleration rule.

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