Ajax and Brindel Corporations have filed consolidated returns for several calendar years.Ajax acquires land for $60,000 on January 1 of last year.On September 1 of this year,Ajax sells the land to Brindel for $90,000.The basis and holding period for the land acquired by Brindel are:
D)none of the above

Question

Quizplus · Accepted Answer

Since Ajax and Brindel Corporations have filed consolidated returns for several calendar years, the land transaction between them is treated as an intercompany transaction. According to the regulations, gain or loss from intercompany transactions is deferred until the property is sold outside of the affiliated group.
Therefore, Brindel's basis in the land is the same as Ajax's basis, which is $60,000. The holding period is also calculated from when Ajax acquired the land, which is January 1 of last year.

Ajax and Brindel Corporations Have Filed Consolidated Returns for Several