Key and Glass Corporations were organized in 2018. They became an affiliated group and filed separate tax returns. In 2019, the corporations begin filing a consolidated tax return. Key and Glass report the following results: Which of the following statements is not correct?

Question

Key and Glass Corporations were organized in 2018. They became an affiliated group and filed separate tax returns. In 2019, the corporations begin filing a consolidated tax return. Key and Glass report the following results:  Which of the following statements is not correct?

Quizplus · Accepted Answer

According to the tax law, a corporation's net operating loss (NOL) can be used to offset taxable income in preceding years or future years, but not in the current year. Therefore, Key's last year NOL cannot offset this year's consolidated taxable income. Choice A and C are correct statements as last year NOL cannot offset current year profits and current year income must first be offset by current year losses of other affiliated corporations.

Key and Glass Corporations Were Organized in 2018