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
A)cannot be carried back.
B)can be carried back three years ago only.
C)can be carried back to last year and the remainder,if any,carried forward to subsequent years.
D)can only be used in future years.

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
A)cannot be carried back. 
B)can be carried back three years ago only. 
C)can be carried back to last year and the remainder,if any,carried forward to subsequent years. 
D)can only be used in future years.

Quizplus · Accepted Answer

Consolidated NOLs can be carried back two years and carried forward 20 years. Since Mako acquired Zebco last year, the NOL can be carried back to last year (the first year of the consolidated return including Zebco) and any remainder can be carried forward to subsequent years.

Mako and Snufco Corporations Are Affiliated and Have Filed Consolidated