Music,Inc. ,a domestic corporation,owns 90% of Vinyl,Ltd. ,a foreign corporation and Digital,Inc. ,a domestic corporation.Music also owns 60% of Record,Inc. ,a domestic corporation.Music receives no distributions from any of these corporations.Which of these entities' net income are included in Music's Federal tax return for the current year assuming Music elects to include all eligible entities in its consolidated tax return?

Question

Quizplus · Accepted Answer

In a consolidated tax return, only domestic corporations that are part of the affiliated group can be included. Therefore, Music and Digital, Inc. are included, but not Vinyl, Ltd. (a foreign corporation) or Record, Inc. (less than 80% ownership).

Music,Inc ,A Domestic Corporation,owns 90% of Vinyl,Ltd