Question: Your client Big Corporation and its wholly owned subsidiary LittleCo

Your client, Big Corporation, and its wholly owned subsidiary, LittleCo, file a consolidated return for Federal income tax purposes. Indicate both the financial accounting and the tax treatment of the following transactions.
a. LittleCo pays a $1 million dividend to Big.
b. LittleCo sells investment land to Big. LittleCo's basis in the land is $200,000. The sale price is $600,000.
c. Six months after purchasing the land from LittleCo, Big sells the investment land to Phillips, an unrelated party, for $750,000.

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  • CreatedSeptember 09, 2015
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