P Corporation owns all the stock of S1 and S2 Corporations. The corporations have filed consolidated tax returns since their creation in Year 1. At the close of business on July 10 of Year 3, P sells all of its S2 stock. The group reports the following results:

Ignore the U.S. production activities deduction.
a. In what year(s) can the corporations deduct the Year 2 consolidated NOL if the group does not elect to forego the carryback period?
b. In what year(s) can the corporations deduct the Year 2 consolidated NOL if the group elects to forego the carryback period?

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Taxable Income Group Member Year 1 Year 2 Year 3 s 8,000 S(18,000) S16,000 S1 9,000 (24,000) (4,000) S2 10,000 (28.000) 15,000a Consolidated taxable income (before NOL deduction) 570,000) a $7,000 is attributable to January 1 through July 10 of Year 3, and S8,000 is attributable to July 11 through December 31 of Year 3, b $16,000 S4,000 S7,000.