Alto and Bass Corporations have filed consolidated tax returns for several calendar years.At the close of business on September 30,Alto Corporation sells all of the Bass Corporation stock.What portion of Alto's and Bass's income for the current year will be included in the consolidated return,assuming its income is earned evenly throughout the year and all months have 30 days?
D)none of the above

Question

Quizplus · Accepted Answer

Consolidated tax returns include the income of all corporations in the group for the entire tax year. Since the sale of Bass Corporation stock occurred on September 30, only 9 months of the current year will be included in the consolidated return. Therefore, 9/12 or 3/4 of Alto and Bass Corporations' income for the current year will be included in the consolidated return. This is reflected in choice B.

Alto and Bass Corporations Have Filed Consolidated Tax Returns for Several