J files a separate return for 2012 with an operating loss of $5,000.For 2013, J purchases all of the outstanding stock of D corporation.J has taxable income of $3,000 in 2013 and D has income of $1,000.Under the "lonely parent rule," how much of J Corporation's loss carryover may be used on the consolidated tax return?

Question

Quizplus · Accepted Answer

The lonely parent rule limits the use of a loss carryover to the amount of income of the acquired corporation. In this case, D corporation has income of $1,000, so only $1,000 of J corporation's loss carryover may be used on the consolidated tax return.

J Files a Separate Return for 2012 with an Operating