Cardinal and Bluebird Corporations both use a calendar year as their tax year. At the close of business on June 30, Cardinal Corporation buys all of Bluebird Corporation's stock. If the two corporations file a consolidated return and both corporations earn their income evenly throughout the year, what portion of Cardinal's income will be included in the consolidated return? (Assume all months have 30 days.)
A)100%
B)50%
C)0%
D)none of the above

Question

Quizplus · Accepted Answer

Since Cardinal Corporation buys all of Bluebird Corporation's stock and they file a consolidated return, 100% of Cardinal's income for the entire year will be included in the consolidated return, regardless of the acquisition date.

Cardinal and Bluebird Corporations Both Use a Calendar Year as Their