Cardinal and Bluebird Corporations both use a calendar year as their tax year. At the close of business on June 30, Cardinal Corporation buys all of Bluebird Corporation's stock. If the two corporations file a consolidated return and both corporations earn their income evenly throughout the year, what portion of Bluebird's income will be included in the consolidated return? (Assume all months have 30 days.)

Question

Quizplus · Accepted Answer

Since Cardinal Corporation acquired Bluebird Corporation on June 30, half of Bluebird's income (50%) for the year would be included in the consolidated return, as the acquisition occurred halfway through the year.

Cardinal and Bluebird Corporations Both Use a Calendar Year as Their