ParentCo purchased all of the stock of ChildCo on January 2, year 2, and the two companies filed consolidated returns for year 2 and thereafter. Both entities were incorporated in year 1. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. No § 382 limit applies. To what extent can ChildCo's year 1 losses be used by the group in year 4?
A) $135,000
B) $125,000
C) $75,000
D) $10,000
E) $0

Question

ParentCo purchased all of the stock of ChildCo on January 2, year 2, and the two companies filed consolidated returns for year 2 and thereafter. Both entities were incorporated in year 1. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. No § 382 limit applies.  To what extent can ChildCo's year 1 losses be used by the group in year 4?
A) $135,000 
B) $125,000 
C) $75,000 
D) $10,000 
E) $0

Quizplus · Accepted Answer

The Answer of ParentCo purchased all of the stock of ChildCo on January 2, year 2, and the two companies filed consolidated returns for year 2 and thereafter. Both entities were incorporated in year 1. Taxable income computations for the members include the following. Neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. No § 382 limit applies.  To what extent can ChildCo's year 1 losses be used by the group in year 4?
A) $135,000 
B) $125,000 
C) $75,000 
D) $10,000 
E) $0

ParentCo Purchased All of the Stock of ChildCo on January