Why Might a Consolidated Group File Separate Income Tax Returns

question 107

Multiple Choice

Why might a consolidated group file separate income tax returns?

• A) There are no intra-entity transfers.
• B) There are no unrealized gains in ending inventory.
• C) One company is a foreign company.
• D) Parent owns 68 percent of one company and 82 percent of another.
• E) All of the above.

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Definitions:

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses.

Mental Sets

A tendency to solve problems using methods that have worked in the past rather than considering new approaches.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving.

Intuitions

The ability to understand something instinctively, without the need for conscious reasoning.