Roland,Shedrick,and Tyrone Corporations formed an affiliated group a number of years ago,which has since filed consolidated tax returns.No prior Sec.1231 losses have been reported by any group member.The group had a consolidated capital loss carryover last year.For the current year,the group reports the following results: Which of following statements is incorrect?
A)No Sec.1231 recapture can occur this year.
B)The net capital gain is taxed at the regular corporate tax rates.
C)The Sec.1231 loss is treated as an ordinary loss.
D)The net capital gain is $20,000.

Question

Roland,Shedrick,and Tyrone Corporations formed an affiliated group a number of years ago,which has since filed consolidated tax returns.No prior Sec.1231 losses have been reported by any group member.The group had a consolidated capital loss carryover last year.For the current year,the group reports the following results:  Which of following statements is incorrect?
A)No Sec.1231 recapture can occur this year. 
B)The net capital gain is taxed at the regular corporate tax rates. 
C)The Sec.1231 loss is treated as an ordinary loss. 
D)The net capital gain is $20,000.

Quizplus · Accepted Answer

D)The net capital gain is $19,000 ($20,000 - $1,000).

Roland,Shedrick,and Tyrone Corporations Formed an Affiliated Group a Number of Years