P Corporation acquires all of S Corporation's stock at the close of business on December 31 of Year 1. The corporations, which file on the calendar year, begin filing a consolidated tax return for Year 2. The corporations report the following taxable incomes (losses), before any net operating loss (NOL) deduction, for Years 1 through 5: Taxable Income Before NOL deduction Group Member Year 1 Year 2 Year 3 Year 4 Year 5P $97,000 $128,000 $70,000 $(12,000) $97,000S (62,000) (20,000) 24,000 39,000 49,000Consolidated taxable income (before NOL deduction) N/A $108,000 $94,000 $27,000 $146,000N/A = Not applicable P and S have no NOLs before Year 1. Ignore the Sec. 382 loss limitation that might apply to P's acquisition of S, assume that the acquisition does not qualify as a reverse acquisition, and assume that Year 1 is a post-2020 year. Requirement What is consolidated taxable income for each of Years 2 through 5?
P Corporation acquires all of S Corporation's stock at the close of business on December 31 of Year 1. The corporations, which file on the calendar year, begin filing a consolidated tax return for Year 2. The corporations report the following taxable incomes (losses), before any net operating loss (NOL) deduction, for Years 1 through 5:
Taxable Income Before NOL deduction
Group Member Year 1 Year 2 Year 3 Year 4 Year 5
P $97,000 $128,000 $70,000 $(12,000) $97,000
S (62,000) (20,000) 24,000 39,000 49,000
Consolidated taxable income (before NOL deduction) N/A $108,000 $94,000 $27,000 $146,000
N/A = Not applicable
P and S have no NOLs before Year 1. Ignore the Sec. 382 loss limitation that might apply to P's acquisition of S, assume that the acquisition does not qualify as a reverse acquisition, and assume that Year 1 is a post-2020 year.
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