Parent Corporation, SubOne, and SubTwo Have Filed Consolidated Returns Since

question 104

Essay

Parent Corporation, SubOne, and SubTwo have filed consolidated returns since 2013. All of the entities were incorporated in 2012. None of the group members incurred any capital gain or loss transactions during 2012-2015, nor did they make any charitable contributions. Taxable income computations for the members are listed below.
* Separate return year.
** Consolidated return year.
a. How much of the 2014 loss is apportioned to SubOne and SubTwo? How is this loss treated in generating a refund of prior tax payments?
b. Why would Parent consider electing to forgo the carryback of the 2014 consolidated NOL?
c. In this light, analyze the election to consolidate.

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Definitions:

Observational Learning

Learning that occurs through observing the behaviors of others and the outcomes of those behaviors.

Specific Phobia

An intense, irrational fear of a specific object, situation, or activity that leads to avoidance behavior.

Fearful Response

A psychological and physiological reaction to perceived threats, involving fear or anxiety.

Genetic Influences

The impact of genes inherited from parents on the physical and behavioral characteristics of an individual.