Mako and Snufco Corporations are affiliated and have filed consolidated returns for the past three years.Mako acquired 100% of Zebco stock on January 1 of last year,the date of Zebco's formation.Mako,Snufco,and Zebco,who have filed consolidated returns for last year and the current year,report the following taxable incomes. The $15,000 consolidated NOL reported in the current year
A)cannot be carried back.
B)can be carried back three years ago only.
C)can be carried back to last year and the remainder,if any,carried forward to subsequent years.
D)can only be used in future years.

Question

Mako and Snufco Corporations are affiliated and have filed consolidated returns for the past three years.Mako acquired 100% of Zebco stock on January 1 of last year,the date of Zebco's formation.Mako,Snufco,and Zebco,who have filed consolidated returns for last year and the current year,report the following taxable incomes.  The $15,000 consolidated NOL reported in the current year
A)cannot be carried back. 
B)can be carried back three years ago only. 
C)can be carried back to last year and the remainder,if any,carried forward to subsequent years. 
D)can only be used in future years.

Quizplus · Accepted Answer

According to the IRS, a consolidated NOL can be carried back for two years prior to the year in which the loss was incurred and carried forward for up to 20 years. As Mako, Snufco, and Zebco filed a consolidated return for last year and the current year, the $15,000 consolidated NOL reported in the current year can be carried back to last year and the remainder, if any, can be carried forward to subsequent years. Therefore, choice C is the best answer.

Mako and Snufco Corporations Are Affiliated and Have Filed Consolidated