ParentCo purchased all of the stock of SubCo on January 2,2008,and the two companies filed consolidated returns for 2008 and thereafter.Both entities were incorporated in 2007.Taxable income computations for the members include the following.Neither group member incurred any capital gain or loss transactions during these years,nor did they make any charitable contributions.No § 382 limit applies.

Assuming that no election is made to forgo the carryback,to what extent are SubCo's 2007 losses used by the group in 2008-2010?
A)$95,000.
B)$68,000.
C)$50,000.
D)$30,000.
E)$0.

Question

ParentCo purchased all of the stock of SubCo on January 2,2008,and the two companies filed consolidated returns for 2008 and thereafter.Both entities were incorporated in 2007.Taxable income computations for the members include the following.Neither group member incurred any capital gain or loss transactions during these years,nor did they make any charitable contributions.No § 382 limit applies.

Assuming that no election is made to forgo the carryback,to what extent are SubCo's 2007 losses used by the group in 2008-2010?

Assuming that no election is made to forgo the carryback,to what extent are SubCo's 2007 losses used by the group in 2008-2010?
A)$95,000. 
B)$68,000. 
C)$50,000. 
D)$30,000. 
E)$0.

Quizplus · Accepted Answer

Losses from SubCo's 2007 separate return year limitation return may only be used to lesser of SubCo's current-year or cumulative contribution to consolidated taxable income.Therefore,$18,000 of SubCo's 2007 loss is absorbed in 2008,$20,000 in 2009,and $30,000 in 2010.

ParentCo Purchased All of the Stock of SubCo on January