Question
LargeCo files on a consolidated basis with LittleCo. The subsidiary was acquired for $500,000 on January 1, Year 1, and it paid a $20,000 dividend
LargeCo files on a consolidated basis with LittleCo. The subsidiary was acquired for $500,000 on
January 1, Year 1, and it paid a $20,000 dividend to LargeCo at the end of both Year 2 AND Year 3.
Given the following information about the subsidiarys operating results, derive the requested amounts as of December 31 of each year. The group files using a calendar year.
LittleCos | LargeCos Investment in LittleCo | LargeCos | ||
Year | Operating Gain/(Loss) | Stock Basis | Excess Loss Account | Operating Gain/ (Loss) |
1 | ($100,000) | A | X | $400,000 |
2 | ($300,000) | B | Y | $400,000 |
3 | $600,000 | C | Z | $400,000 |
A:
B:
C:
X:
Y:
Z:
What is the consolidated taxable income for:
Year 1:
Year 2:
Year 3:
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