Consolidation Assignment Lazy Flamingo Corporation (LFC) and its wholly owned subsidiary, Plucky Pelican Corporation (PPC), have filed consolidated tax returns for several years. Both corporations use the hybrid method of accounting and a calendar year end. Note the following additional information: LFC and PPC are the only members of the controlled group. LFC's address is 1234 Tamiami Trail, Fort Myers, FL 33901. Its employer identification number is 59-2345678. LFC was incorporated on May 5, 2010. Its total assets are $4,285,000. LFC has a $40,000 consolidated NOL carryover from the preceding year. The NOL is wholly attributable to LFC. LFC has a charitable contribution carryover from the prior year of $100,000. Both companies use the first-in first-out (FIFO) inventory method. PPC began selling to LFC in the prior year the gross profit percentage on intercompany sales is the same as to unrelated parties and has remained consistent these two years. In the prior year the sales from PPC to LFC resulted in a deferred intercompany profit of 62,500. During the current year, PPC sells additional inventory to LFC, realizing a $280,000 profit. At the end of the current year, LFC holds inventory responsible for $34,500 of this profit. The dividend income for the two companies is as follows: LFC PPC 150,000 Dancing Dolphin Co. 25,000 C Life Inc. Total 175,000 PPC 16,000 43,000 59,000 LFC receives all its interest income from PPC. PPC paid interest on June 30th of the current year on a loan outstanding from November of last year through June 30th of this year. The rest of PPC's interest expense is to an unrelated third party. The salaries listed for the companies include officers' salaries as follows: LFC of $97,000 and PPC of $75,000. LFC capital losses include a $4,000 long-term loss on a sale of property to PPC in the current year. PPC still holds that asset at year-end of this year. The corporations have no non-recaptured net Sec. 1231 losses from prior years. During 2021, they report the operating results listed in the chart on the next page. 23 1 Represents a 15% interest in the company. Represents a 10% interest in the company. Represents a 10% interest in the company. Consolidation Assignment Income or Deduction Gross Receipts Cost of Goods Sold Gross Profit Dividends Flamingo Lazy Plucky Pelican $4,500,000 $2,300,000 -$2,100,000 -$920,000 $2,400,000 $1,380,000 175,000 59,000 Interest 12,000 Sec 1231 gain 18,000 Sec 1245 gain 22,000 LTCG(L) -5,000 6,000 STCG(L) -3,000 Total Income $2,582,000 $1,482,000 Salaries and wages 375,000 200,000 Repairs 27,000 12,000 Bad Debts 11,000 5,000 Taxes 42,000 24,000 Charitable contributions 97,000 48,000 Interest 30,000 20,000 Depreciation (not included in CGS) 48,000 40,000 Other expenses 280,000 248,000 Total Deductions 910,000 597,000 Separate return taxable income $1,672,000 $885,000 (before NOL and DRD) Required: Prepare a spreadsheet to arrive at consolidated taxable income. Prepare the first page of the 1120 for 2021 of the consolidated group. Determine the consolidated group's 2021 tax liability