Blair and Cannon Corporations are members of an affiliated group. No prior net Sec. 1231 losses have been reported by any group member. The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows. Which of the following statements is correct?
A)The consolidated group reports a net short-term capital gain of $1,000.
B)Blair Corporation's separate return reports a $4,000 net long-term capital gain.
C)Cannon Corporation's separate return reports a $1,000 net long-term capital loss.
D)All three of the above are correct.

Question

Blair and Cannon Corporations are members of an affiliated group. No prior net Sec. 1231 losses have been reported by any group member. The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows.  Which of the following statements is correct?
A)The consolidated group reports a net short-term capital gain of $1,000. 
B)Blair Corporation's separate return reports a $4,000 net long-term capital gain. 
C)Cannon Corporation's separate return reports a $1,000 net long-term capital loss. 
D)All three of the above are correct.

Quizplus · Accepted Answer

- The consolidated group reports a net short-term capital gain of $1,000 because the total short-term gains of $4,000 exceed the total short-term losses of $3,000.
- Blair Corporation's separate return reports a $4,000 net long-term capital gain because it has long-term gains of $6,000 and long-term losses of $2,000.
- Cannon Corporation's separate return reports a $1,000 net long-term capital loss because it has long-term gains of $1,000 and long-term losses of $2,000.

Blair and Cannon Corporations Are Members of an Affiliated Group