Which of the following is not an advantage of filing a consolidated income tax return?
A) The existence of unrealized losses in ending inventory.
B) The ability to use net operating losses of one company to offset profits of another company.
C) The deferral of unrealized gains.
D) Transfers of inventory at a transfer price above cost.
E) Intercompany dividends are not taxable.

Question

Quizplus · Accepted Answer

The existence of unrealized losses in ending inventory is not an advantage of filing a consolidated income tax return. In fact, it may result in a lower tax benefit as the losses cannot be recognized until the inventory is actually sold. The other options listed are advantages of filing a consolidated income tax return.

Which of the Following Is Not an Advantage of Filing