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 NOL deduction, for Years 1 through 5:

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-2017 year. What is consolidated taxable income for each of Years 2 through 5?

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Taxable Income Before NOL deduction Group Member Year 1 Year 2 Year 3 Year 4 Year 5 $100,000 $125,000 (63,000) $71,000 $(8,000) $100,000 25,000 S (15,000) 18,000 40,000 Consolidated taxable income (before NOL deduction) N/A = Not applicable N/A $110,000 $ 89,000 $17,000 $140,000