Mako and Snufco Corporations are affiliated and have filed consolidated returns for the past three years. Mako acquired 100% of Zebco stock on January 1 of last year, the date of Zebco's formation. Mako, Snufco, and Zebco, who have filed consolidated returns for last year and the current year, report the following taxable incomes. The $15,000 consolidated NOL reported in the current year

Question

Mako and Snufco Corporations are affiliated and have filed consolidated returns for the past three years. Mako acquired 100% of Zebco stock on January 1 of last year, the date of Zebco's formation. Mako, Snufco, and Zebco, who have filed consolidated returns for last year and the current year, report the following taxable incomes.  The $15,000 consolidated NOL reported in the current year

Quizplus · Accepted Answer

The consolidated NOL can be carried back to last year and the remainder, if any, carried forward to subsequent years because Mako acquired 100% of Zebco stock on January 1 of the prior year, making Zebco part of the consolidated group for both last year and the current year. Therefore, the NOL can be carried back to offset taxable income from last year's consolidated return. If there is any remaining NOL after carrying it back to last year, it can be carried forward to offset taxable income in future years.

Mako and Snufco Corporations Are Affiliated and Have Filed Consolidated