The Nannerl consolidated group reported the following taxable income amounts. Parent owns all of the stock of both Junior and Minor. Determine the net operating loss (NOL) that is apportioned to Junior.

Question

Quizplus · Accepted Answer

To determine the NOL that is apportioned to Junior, we need to calculate the consolidated taxable income and the taxable income of the parent without including Junior's taxable income.

Consolidated taxable income = $2,200,000 + $1,250,000 + $750,000 - $500,000 - $300,000 - $350,000 = $2,050,000

Taxable income of the parent without including Junior = $2,200,000 - $500,000 = $1,700,000

Now we can calculate the NOL that is apportioned to Junior:

NOL = Junior's taxable income - (Junior's taxable income / consolidated taxable income) x consolidated NOL

NOL = $350,000 - ($350,000 / $2,050,000) x $400,000 = $540,244 (rounded to the nearest dollar)

Therefore, the NOL that is apportioned to Junior is B) $540,000.

The Nannerl Consolidated Group Reported the Following Taxable Income Amounts