SubCo sells an asset to ParentCo at a realized gain. While ParentCo still holds the asset, SubCo leaves the consolidated group. As a result:
A) The gain never is recognized.
B) SubCo recognizes the gain on its first tax return after leaving the group.
C) The group recognizes the gain under the related party rules.
D) The group recognizes the gain under the acceleration rule.

Question

Quizplus · Accepted Answer

The acceleration rule requires the group to recognize the gain when SubCo leaves the group.

SubCo Sells an Asset to ParentCo at a Realized Gain