ACC565 WEEK 5 DISCUSSION 2
“Consolidated Net Operating Losses and Intercompany Transactions” Please respond to the following:
- A
client is pursuing the acquisition of Corporation A that has a
substantial net operating loss. Corporation B is a member of the
controlled group and is currently included in the consolidated tax
return that also has a net operating loss. Analyze the potential
advantages and disadvantages of Corporation B’s acquisition of
Corporation A and Corporation A’s subsequent inclusion in Corporation
B’s consolidated tax return. Suggest the key tax issues the client
should consider in determining the deductibility of the net operating
losses. - From
the e-Activity, create a tax-planning strategy for a client geared
toward complying with the final regulations issued by the IRS under Code
Section 267 (f). (Note: Code Section 267 (f) discusses the time taken
into account for deferred losses on the sale or exchange of property
between members of a controlled group.) Recommend the alternatives that
you believe would be best suited for the client to use in order to both
take advantage of losses between members and remain in compliance with
related regulations. Justify your response.
ACC565 WEEK 5 DISCUSSION 2
“Consolidated Tax Returns” Please respond to the following:
- Corporations
P, S, and C are members of a parent-subsidiary controlled group filing a
consolidated tax return. Corporations A and B are members of a
brother-sister controlled group that cannot file a consolidated tax
return. Design a strategy geared toward creating an affiliated group
which makes Corporations A, B, P, S, and C all eligible to file a
consolidated tax return. - Assess
the adequacy of the schedule M-3 Part 1 in creating transparency
between the consolidated financial statements and the consolidated tax
returns of the corporations discussed in the first part of this
discussion. Suggest at least two (2) modifications to the M-3 that you
can use to identify possible issues the IRS would most likely examine on
a consolidated tax return.
