P owns all the stock of S1 and S2 Corporations. The corporations have filed consolidated tax returns for several years. In the current year (Year 1), S1 sells land to P for $70,000. S1 purchased the land several years earlier for $38,000.P sells the land to an unrelated third party in Year 3 for $100,000. Thesales terms require the third party to pay P $45,000 in Year 3, $35,000 in Year 4, and $20,000 in Year 5, plus interest at a rate acceptable to the IRS. The third party pays all the required amounts.

Requirements

a.	In what year(s) does the consolidated group include S1's gain or loss and P's gain or loss in its taxable income?
b.	Suppose P sells all of S1's stock on December 31 of Year 4. How would this sale change your answer to Part a?
c.	Suppose S1 sold the land to P in Year 1 for $107,000 instead of $70,000. How would this sale change your answer to Part a?

Requirement a. In what year(s) does the consolidated group include S1's gain or loss and P's gain or loss in its taxable income?

Complete the table below to show the gain or loss included in consolidated income each year. (Select the years in chronological order. If a box is not used in the table, leave the box empty; do not enter a zero. Use parentheses or a minus sign for any adjustments and eliminations reducing the consolidated taxable income. Round intermediary percentages to four decimal places, X.XXXX%; then round your final answers to the nearest dollar.)

	Consolidated	Adjustments and	S1's separate	P's separate
Year	taxable income	Eliminations	reporting	reporting
Total