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?

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?

Quizplus · Accepted Answer

A consolidated return allows the affiliated group to offset the subsidiary's current year loss against the parent's current year income. However, since the subsidiary filed a separate return in the initial year, it cannot carry back any loss to that year since it was not part of the affiliated group at that time. Therefore, the subsidiary can only carry back its loss to the prior year, and the amount that can be carried back is limited to the subsidiary's taxable income in that year, which in this case is $1,000.

Parent and Subsidiary Corporations Form an Affiliated Group