ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. The 2014 consolidated loss:

Question

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions.  The 2014 consolidated loss:

Quizplus · Accepted Answer

The consolidated loss in 2014 can be carried back for up to two years, and then carried forward for up to 20 years, to offset taxable income in those years. The parent can make an election to forgo the carryback period, which means the loss can only be carried forward. However, there is no option to forgo the carryforward period. Therefore, Option A is incorrect. Option C is incorrect because the loss can offset the consolidated income of both ParentCo and SubCo in future years. Option D is incorrect because the consolidated return includes both ParentCo and SubCo's income for all years, so the loss can be used to offset any consolidated income in the future.

ParentCo and SubCo Have Filed Consolidated Returns Since Both Entities