ParentCo and SubCo have filed consolidated returns since both entities were incorporated in Year 1. Taxable income
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Question:
ParentCo and SubCo have filed consolidated returns since both entities were incorporated in Year 1. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions.
ParentCo's | SubCo's Taxable | Consolidated | |
Year | Taxable Income | Income | Taxable Income |
Year 1 | $100,000 | $ 35,000 | $135,000 |
Year 2 | $100,000 | ($ 20,000) | $ 80,000 |
Year 3 | $100,000 | ($109,000) | ? |
Year 4 | $100,000 | $190,000 | ? |
The Year 3 consolidated loss:
a.is carried back and produces a tax refund.
b.cannot be used to offset any of ParentCo's Year 1 income.
c.can be used only to offset SubCo's future income.
d.is carried forward to Year 4.
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
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