How do the members of a Federal consolidated group split among themselves the benefits of the lower tax brackets on the first $75,000 of taxable income?
A)According to their relative net asset holdings.
B)According to an internal tax-sharing agreement.
C)According to an internal tax-sharing agreement, which may be modified by the IRS upon audit.
D)According to a tax-sharing agreement that must be approved by the IRS by the end of the first quarter of the tax year.

Question

Quizplus · Accepted Answer

The members of a Federal consolidated group split among themselves the benefits of the lower tax brackets on the first $75,000 of taxable income according to an internal tax-sharing agreement. This agreement is typically negotiated and agreed upon among the members of the group and is based on their respective ownership interests. It is not subject to approval by the IRS, although the IRS may examine the agreement during an audit to ensure that it is consistent with the provisions of the Internal Revenue Code.

How Do the Members of a Federal Consolidated Group Split