W Corp.owns 100 percent of the stock of three subsidiaries, X, Y, and Z.W, X, Y, and Z file a consolidated return for U.S.federal income tax purposes.W, X, and Y have nexus with both States A and B.Z has nexus only with State B.If a consolidated state income tax return is filed in State A, how many corporations will be included in such return?
A)1
B)2
C)3
D)4
E)Consolidated state income tax returns may never be filed

Question

Quizplus · Accepted Answer

For State A, only corporations with nexus in that state are included in a consolidated state income tax return. W, X, and Y have nexus with State A, so they will be included in the consolidated return for State A. Z, which only has nexus with State B, will not be included in State A's consolidated return.

W CorpOwns 100 Percent of the Stock of Three Subsidiaries, X