ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. 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. The 2014 consolidated loss:

Question

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2012. 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.  The 2014 consolidated loss:

Quizplus · Accepted Answer

Generally, a consolidated group can carry back a consolidated net operating loss (CNOL) for up to two years before the loss year, and then any remaining CNOL can be carried forward for up to 20 years after the loss year. Therefore, the 2014 consolidated loss can be carried back to offset any taxable income of ParentCo or SubCo in 2012 or 2013, unless the parent makes an election to forgo the carryback period. Option A is incorrect because the loss can be carried back, not just forward. Option C is incorrect because the CNOL can be used to offset either ParentCo's or SubCo's income. Option D is incorrect because the CNOL can be used to offset any taxable income of ParentCo, including 2012 income.

ParentCo and SubCo Have Filed Consolidated Returns Since Both Entities