P and S Corporations form in Year 1, with S as P€™s wholly-owned subsidiary. The corporations immediately elect to file consolidated tax returns. The group reports the following results:

The group does not elect to forego any NOL carrybacks. Ignore the U.S. production activities deduction. In what years can the group deduct the Years 3 and 4 consolidated NOLs?

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Taxable Income Year1 Year 2 Year 3 Year 4 Year 5 S9,000 S10,000 S(6,000) S 20,00 S15,000 (7800) | 2000 | 2000 Group Member (30,000 10,000 Consolidated taxable income (before NOL deduction) 00 S12.000 S14.000 S10.000 $25,000