Which of the following statements is true with regard to intercompany transactions?
A)An intercompany transaction is eliminated from consolidated taxable income.
B)All intercompany gains are recognized, but losses must be deferred.
C)A cash sale of a business asset by the purchasing member to an acquirer outside of the group triggers immediate recognition of the gain or loss.
D)The gain or loss on an intercompany transaction is deferred for up to ten years, after which it is recognized.

Question

Quizplus · Accepted Answer

A cash sale of a business asset by the purchasing member to an acquirer outside of the group triggers immediate recognition of the gain or loss. This means that intercompany transactions involving the sale of assets to parties outside of the group are recognized immediately, rather than being deferred. Options A, B, and D are incorrect.

Which of the Following Statements Is True with Regard to Intercompany