The Philstrom consolidated group reported the following taxable income amounts.Parent owns all of the stock of both Junior and Minor.Determine the net operating loss (NOL)that is apportioned to Junior.

A)$0.All NOLs of a consolidated group are apportioned to the parent.
B)$300,000.
C)$360,000.
D)$400,000.

Question

The Philstrom consolidated group reported the following taxable income amounts.Parent owns all of the stock of both Junior and Minor.Determine the net operating loss (NOL) that is apportioned to Junior.

A)$0.All NOLs of a consolidated group are apportioned to the parent. 
B)$300,000. 
C)$360,000. 
D)$400,000.

Quizplus · Accepted Answer

The consolidated taxable income is calculated by adding up the taxable income of all subsidiaries and eliminating any intercompany transactions. The consolidated taxable income of the group is $650,000 ($250,000 + $200,000 + $200,000). The group also has a net operating loss (NOL) of $300,000. The NOL is apportioned among the subsidiaries based on each subsidiary's proportionate share of the group's taxable income. In this case, Junior has taxable income of $200,000, which is 30.77% of the group's taxable income ($200,000/$650,000), so its share of the group's NOL is $92,308 ($300,000 x 30.77%). Therefore, the net operating loss apportioned to Junior is $92,308.

The Philstrom Consolidated Group Reported the Following Taxable Income Amounts