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?

SWFT Corp Partner Estates Trusts
42nd Edition
ISBN:9780357161548
Author:Raabe
Publisher:Raabe
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 25CE
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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. 

Requirement
What is consolidated taxable income for each of Years 2 through​ 5?
 
 
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