- offsetting the profits of one company against losses of another;
- netting out capital gains and losses;
- no tax on intercompany distributions;
- the recognition of income is deferred on intercompany transactions;
What are the major advantages and disadvantages of filing a consolidated tax return quizlet?
What are the major advantages and disadvantages of filing a consolidated tax return? An advantage includes income of a profitable member can be offset by losses of another member . However, a disadvantage includes losses of an unprofitable member may limit deductions or credits of a profitable member.
Which one of the following is a disadvantage to filing a consolidated return?
the disadvantages of filing a consolidated return include: ☐ the election to file consolidated returns is binding for future years and may only be terminated by disbanding the group or seeking permission of the internal revenue service. ☐ Tax credits may be limited by operating losses of other members.
What is a consolidated return?
A consolidated tax return is a corporate income tax return of an affiliated group of corporations , who elect to report their combined tax liability on a single return. The purpose of the tax return allows for corporations that run their business through many legal affiliates to be viewed as one single entity.
Are you required to file a consolidated return?
The Internal Revenue Service doesn't require corporations to file consolidated tax returns with their subsidiaries, but it does allow them to do so. Before a corporation can file a consolidated return, it must satisfy certain stock ownership and voting requirements.
What is the benefit of filing a consolidated return and what are the ownership requirements for filing a consolidated return?
The principal advantage of filing consolidated returns is the ability to combine the income and loss of each member of an affiliated group into a single taxable income . 8 Thus, net operating losses of one member of the group can be used to offset the taxable income of another member.
Can a partnership file a consolidated return?
A partnership may not be included in a consolidated return , even if it is 100% owned by members of an affiliated group, since a partnership is not a corporation. However, a member's earnings that flow through from a partnership are included as part of the consolidated group's taxable income or loss.
Why might a consolidated group file separate income tax returns quizlet?
An advantage of filing a consolidated return is that losses of one affiliated group member may be offset against the taxable income of other group members in the same tax year . The election to file a consolidated return is made annually.
What are organizational expenditures how are they treated for tax purposes?
3-5 What are organizational expenditures? How are they treated for tax purposes? Organizational expenditures include outlays incident to the creation of a corporation, chargeable to the corporation's capital account , and of a character that would be amortizable if the corporation had a limited life.
What are the tax advantages of substituting fringe benefits for salary paid to a shareholder-employee? This permits the shareholder-employee to exclude these amounts from personal taxation while the corporation obtains a deduction for the expenditure . What corporations must pay estimated taxes?
What is the difference between combined and consolidated returns?
Corporations are legal entities and taxed the same as people . Combined tax returns are filed by companies that are nationwide chains and filed in each state that in which they conduct business. ...
What is a consolidated tax certificate?
The consolidated tax certificate (CTC) is a summary of the returns you've received on your investment portfolio . It shows any tax that has been deducted at source from the dividends you've received. ... You can use the information in the CTC to help you complete your Self Assessment tax return.
What states allow consolidated tax returns?
Today, 24 states (including Connecticut starting in tax year 2016) and the District of Columbia require combined reporting. These include Illinois (1982), Maine (1986), Massachusetts (2008), New Hampshire (1981), New York (2007), Rhode Island (2014), Vermont (2004), and Wisconsin (2009).
What is the next day rule?
The next-day rule is an exception to the end-of-day rule. It provides that if a . transaction occurs on the acquisition date and is properly allocable to the post- closing portion of the target's day, the transaction is treated for U.S. federal income .
Are tax relief services worth it?
Generally speaking, tax debts under $10,000 aren't worth paying a tax relief company to settle; you can usually settle them yourself without much issue. However, some people still may wish to have some professional assistance if they're struggling to resolve a small tax debt.
What is consolidated file?
Conso File is the file with the data of the TDS returns processed for a relevant financial year, quarter and form type.
