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.

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