Cooper Corporation joined the Duck consolidated Federal income tax return group when Cooper held a $1 million NOL carryforward. In its first year as a part of the Duck group, Cooper generated a $150,000 operating profit. For that year, Duck can deduct only $150,000 of Cooper's NOL in computing consolidated taxable income.

Question

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When a corporation joins a consolidated group, its NOL carryforwards can be used to offset its own income first. Since Cooper generated a $150,000 operating profit in its first year as part of the Duck group, only that amount of Cooper's NOL carryforward can be used to offset the consolidated taxable income for that year.

Cooper Corporation Joined the Duck Consolidated Federal Income Tax Return