Which of the Following Potentially Is a Disadvantage of Electing

question 4

Multiple Choice

Which of the following potentially is a disadvantage of electing to file a Federal corporate income tax consolidated return?

• A) Additional administrative costs in complying with the election.
• B) Deferral of gains realized in transactions between group members.
• C) Increased basis in the stock of a subsidiary that generates annual taxable income.
• D) Dividends received deduction for payments from a subsidiary to the group's parent.

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Definitions:

Operating Leverage

A financial concept that measures a company's fixed costs as a percentage of its total costs, indicating how a change in sales will impact profits due to fixed expenses.

Wire Strippers

A hand tool used to strip the insulation from electric wires.

Manufacturer

A person or company that makes goods for sale, typically involving machinery and labor.

Unit Contribution Margin

The amount by which the sale price of a unit exceeds its variable cost, indicating how much each unit contributes to covering fixed costs and generating profit.