All of the following are advantages of consolidated tax returns, except which of the following?

	a.	Better use of tax deductions and credits
	b.	Losses from intercompany transactions are deferred
	c.	Income from intercompany sales are deferred
	d.	Consolidated tax returns is a disadvantage.

When consolidating tax returns, what are the two major types of adjustments to standalone income items?

	a.	Eliminate Intercompany transactions and eliminate gain/losses and deductions at the standalone level
	b.	Eliminate Intercompany transactions and Apply tax credits at consolidated level
	c.	Adjust for Revenue based on accrual basis accounting method and eliminate intercompany transactions
	d.	Adjust for Intercompany transactions and eliminate the income from the subsidiary

Which of the following is not permitted to file a consolidated return, assuming all consent to consolidate?

	a.	Incorporated companies
	b.	Foreign Corporations
	c.	Affiliated group
	d.	Parent with brother and sister

The Financial Accounting Standards Board (FASB) defines the Generally Accepted Accounting Principles (GAAP). As part of GAAP the, Accounting Standards Codification (ASC) topic 740 applies to accounting standard for which of the following taxes?

	a.	Federal, state, and local Income taxes
	b.	Property taxes
	c.	Excise taxes
	d.	All types of taxes.

The ASC topic 740 defined by the Financial Accounting Standards Board (FASB) as part of the Generally Accepted Accounting Principles (GAAP) takes which of the following approach to accounting for income taxes.

	a.	Income statement approach
	b.	Cumulative approach
	c.	Balance sheet approach
	d.	Timing approach

Classify the following transaction by determining the reason(s) for a difference in the accounting books and the tax return (Mark all that apply).

XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. distributed a $200,000 dividend to XYZ. For tax purposes, XYZ reports the actual dividend received as income, and a 65% dividends received dedcution. (More than one option can be correct)

		Income for book but not for tax
		Deduction for book but not for tax.
		Deductions for the tax return but not for the books.
		Income for tax, but not for the books.

Classify the following transaction by determining whether the transaction is creating a temporary or permanent difference between the books and the tax return.

Rich City Inc. has reported on the financial statement (books) $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account.

	a.	Temporary
	b.	Permanent
	c.	There is no difference in the amount recognized on the book and the tax return created by this transaction.

Classify the following transaction by determining the reason for a difference in the accounting books and the tax return (Mark all that apply).

Rich City Inc. has reported on the financial statement (books) $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. (More than one option many be correct)

		Income for book but not for tax
		Deduction for book but not for tax.
		Deductions for the tax return but not for the books.
		Income for tax, but not for the books.