Parent and Subsidiary Corporations form an affiliated group.Last year,the initial year of operation,Parent and Subsidiary filed separate returns.This year the group files a consolidated return. Taxable Income
How much of the Subsidiary loss can be carried back to last year?
A)$0
B)$1,000
C)$10,000
D)none of the above

Question

Parent and Subsidiary Corporations form an affiliated group.Last year,the initial year of operation,Parent and Subsidiary filed separate returns.This year the group files a consolidated return. Taxable Income
 How much of the Subsidiary loss can be carried back to last year?
A)$0 
B)$1,000 
C)$10,000 
D)none of the above

Quizplus · Accepted Answer

The Subsidiary Corporation can carry back its loss to the preceding year when it filed a separate return. The amount of the carryback is limited to the lesser of the Subsidiary's net operating loss or the taxable income of the affiliated group in the preceding year. In this case, since the Subsidiary had a separate return in the preceding year, the taxable income of the affiliated group is zero. Therefore, the Subsidiary can carry back up to $1,000 of its loss from the current year to the preceding year.

Parent and Subsidiary Corporations Form an Affiliated Group