Blair and Cannon Corporations are members of an affiliated group.No prior net Sec.1231 losses have been reported by any group member.The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows. Which of the following statements is correct?

Question

Blair and Cannon Corporations are members of an affiliated group.No prior net Sec.1231 losses have been reported by any group member.The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows.  Which of the following statements is correct?

Quizplus · Accepted Answer

A) The consolidated group reports a net short-term capital gain of $1,000 because the total short-term gains ($3,000) exceed the total short-term losses ($2,000).

B) Blair Corporation's separate return reports a $4,000 net long-term capital gain because its long-term gains ($6,000) exceed its long-term losses ($2,000).

C) Cannon Corporation's separate return reports a $1,000 net long-term capital loss because its long-term losses ($3,000) exceed its long-term gains ($2,000).

Therefore, all three statements are correct.

Blair and Cannon Corporations Are Members of an Affiliated Group