ParentCo and SubCo had the following items of income and deduction for the current year. Compute ParentCo and SubCo's consolidated taxable income or loss.

Question

ParentCo and SubCo had the following items of income and deduction for the current year.  Compute ParentCo and SubCo's consolidated taxable income or loss.

Quizplus · Accepted Answer

ParentCo has taxable income of $60,000 and SubCo has a taxable loss of $10,000. Therefore, the consolidated taxable income is $50,000. However, there is a $40,000 intercompany dividend that must be eliminated, resulting in a consolidated taxable income of $90,000.

ParentCo and SubCo Had the Following Items of Income and Deduction