Consolidated Tax Returns

Question 1

Can a member of a consolidated group elect annually if they would like to file a consolidated tax return in that current year?

Answer 1

No, the election to file consolidated returns is binding for future years and may only be terminated by disbanding the group or seeking permission from the IRS.

Question 2

What is not an advantage of filing a consolidated tax return?

Answer 2

Mandatory compliance with complex regulations

Question 3

If a parent company receives dividends from its subsidiary, what are the tax implications in a consolidated tax return?

Answer 3

The parent company can use the dividend-received deduction (DRD) to eliminate the dividend received.