Which of the Following Statements Regarding Controlled Groups Is False

question 88

Multiple Choice

Which of the following statements regarding controlled groups is false?

• A)The purpose of the controlled group rules is to essentially treat the group as though it were one entity for purposes of determining certain tax benefits.
• B)Having several entities treated as a controlled group is advantageous for tax purposes because each corporation in the group is allowed to use the 15% tax bracket in the corporate tax rate schedule in computing its regular income tax liability.
• C)Lauren owns 100% of Corporation A stock and 100% of Corporation B stock. Corporation A and Corporation B form a controlled group.
• D)Corporation A owns 100% of Corporation B. Corporation A and Corporation B form a controlled group.

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Definitions:

Statement of Financial Position

Also known as a balance sheet, it is a financial statement that shows the assets, liabilities, and equity of a company at a specific point in time, illustrating the company's financial condition.

Total Assets

The cumulative amount of all resources controlled by an entity from which future economic benefits are expected to flow to the entity.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and not expected to be converted to cash in the short term.

Current Liabilities

Short-term financial obligations that are due typically within one year or within a normal operating cycle.