Match each of the following items with the appropriate description, indicating whether the item's treatment for financial accounting and Federal income tax purposes is the same or not.
-Parent owns 100% of a U.S. partnership and wants the entity to join the consolidated group.
A)Tax and book treatment is the same
B)Tax and book treatment differ

Question

Quizplus · Accepted Answer

For financial accounting purposes, a U.S. partnership cannot join a consolidated group because consolidated financial statements typically include corporations, not partnerships. However, for Federal income tax purposes, there are specific rules and elections (e.g., the check-the-box regulations) that might allow a disregarded entity or a partnership to be treated as part of a consolidated group under certain conditions, indicating a difference in treatment between tax and book purposes.

Match Each of the Following Items with the Appropriate Description