Which of the following statements is false regarding consolidated tax returns?
A)An affiliated group can file a consolidated tax return only if it elects to do so.
B)To file a consolidated tax return, one corporation must own 50percent or more of the stock of another corporation.
C)For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member.
D)For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group.

Question

Quizplus · Accepted Answer

A consolidated tax return can be filed if the common parent corporation directly owns at least 80% of the voting stock and 80% of the total shares of stock of at least one other corporation. Therefore, the statement that one corporation must own 50% or more of the stock of another corporation to file a consolidated tax return is false.

Which of the Following Statements Is False Regarding Consolidated Tax