Which of the following potentially is a disadvantage of electing to file a Feder

Question

Which of the following potentially is a disadvantage of electing to file a Federal consolidated corporate income tax return?

a. The tax basis of investments in the stock of subsidiaries is unaffected by members contributing to consolidated taxable income. b

. The taxation of intercompany dividends is not eliminated. Recognition of losses from certain intercompany transactions is deferred.

c. The consolidated ACE adjustment could be reduced for the filing group.

d. The § 1231 loss of one member is not offset against the § 1231 gain of another member of the group.

Explanation / Answer

Ans: One major disadvantage of filing a Federal Consolidated corporate tax return is that the recognition of losses from interccompany transactions is deferred.

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