ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2009.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 2011 consolidated loss:
A)must be carried forward before it can be carried back.
B)must be carried forward,unless an election to forgo carryforward is made by the parent.
C)must be carried back,unless an election to forgo the carryback is made by the parent.
D)can only be used to offset SubCo's future income.
E)cannot be used to offset any of ParentCo's 2009 income.

Question

ParentCo and SubCo have filed consolidated returns since both entities were incorporated in 2009.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 2011 consolidated loss:

The 2011 consolidated loss:
A)must be carried forward before it can be carried back. 
B)must be carried forward,unless an election to forgo carryforward is made by the parent. 
C)must be carried back,unless an election to forgo the carryback is made by the parent. 
D)can only be used to offset SubCo's future income. 
E)cannot be used to offset any of ParentCo's 2009 income.

Quizplus · Accepted Answer

According to the information provided, neither group member incurred any capital gain or loss transactions during these years, nor did they make any charitable contributions. Therefore, the 2011 consolidated loss can be carried back (for up to two years) or carried forward (for up to 20 years) to offset taxable income in prior or future years. However, unless an election to forgo the carryback is made by the parent, the loss must first be carried back to the two preceding years before it can be carried forward. Therefore, the correct answer is C.

ParentCo and SubCo Have Filed Consolidated Returns Since Both Entities