Alto and Bass Corporations have filed consolidated tax returns for several calendar years. At the close of business on September 30, Alto Corporation sells all of the Bass Corporation stock. What portion of Alto's and Bass's income for the current year will be included in the consolidated return, assuming its income is earned evenly throughout the year and all months have 30 days?
D) none of the above

Question

Quizplus · Accepted Answer

Since the sale of Bass Corporation's stock occurred on September 30, only nine months of their income will be included in the consolidated return (January through September). Alto Corporation's full year’s income will be included in the consolidated return since they were still part of the group for the entire year. Therefore, Alto's income for the full year and Bass's income for nine months will be included in the consolidated return. Choice B shows this for both corporations.

Alto and Bass Corporations Have Filed Consolidated Tax Returns for Several