Alto and Bass Corporations have filed consolidated tax returns for several calendar years.At the close of business on September 30,Alto Corporation sells all of the Bass Corporation stock.What portion of Alto's and Bass's income for the current year will be included in the consolidated return,assuming its income is earned evenly throughout the year and all months have 30 days?
D)none of the above

Question

Quizplus · Accepted Answer

Since the sale of Bass Corporation stock occurred on September 30, the income earned by Bass Corporation from October 1 to December 31 will not be included in the current year's consolidated return. Therefore, only 9 months (January 1 to September 30) of income from both Alto and Bass Corporations will be included in the consolidated return. This is represented by 9/12 or 3/4 of the current year's income. Therefore, the correct answer is B, representing 3/4 of Alto's and Bass's income for the current year.

Alto and Bass Corporations Have Filed Consolidated Tax Returns for Several