The purpose of the rules governing intercompany sales on a Federal consolidated tax return is to treat the group as though it is:
A)One company with several divisions.
B)A foreign corporation.
C)A partnership of the various affiliates.
D)Not subject to the related party loss rules.
E)Exempt from being audited for the first five years of the consolidation election.

Question

Quizplus · Accepted Answer

The purpose of the rules governing intercompany sales on a Federal consolidated tax return is to treat the group as though it is one company with several divisions. This means that the group is treated as a single entity for tax purposes, and intercompany transactions are eliminated to avoid double-counting of income and deductions.

The Purpose of the Rules Governing Intercompany Sales on a Federal