P and S Corporations have filed consolidated tax returns on a calendar year basis for several years.
Question:
P and S Corporations have filed consolidated tax returns on a calendar year basis for several years. Both corporations use the accrual method of accounting. On August 1 of the current year (Year 1), P loans S $250,000 on a one-year note. P charges interest at a 12% simple rate. S repays the loan plus interest on July 31 of Year 2. How does this intercompany transaction affect the group’s consolidated taxable income?
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Ps intercompany items are its interest income of 12500 250000 x 012 x 512 in Year ...View the full answer
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