1. Income taxes are currently due on intercompany profits when:
(a) Profits originate from upstream sales
(b) Separate-company tax returns are filed
(c) Consolidated tax returns are filed
(d) Affiliates are accounted for as consolidated subsidiaries
2. The right of a consolidated entity to file a consolidated tax return is contingent upon:
(a) Ownership by a common parent of all the voting stock of group members
(b) Ownership by a common parent of 90% of the voting stock of group members
(c) Classification as an affiliated group
(d) Direct or indirect ownership of a majority of the outstanding stock of all group members
3. When affiliates are classified as an affiliated group for tax purposes, the group:
(a) Excludes unrealized profits from intercompany transactions from taxable income
(b) Must file a consolidated income tax return
(c) May file separate income tax returns
(d) Pays lower income taxes
4. Deferred income taxes are provided for unrealized profits from intercompany transactions when:
(a) A consolidated tax return is filed
(b) Separate-company tax returns are filed
(c) The unrealized profits are from upstream sales
(d) The consolidated entity is an affiliated group