The Flying Gator Corporation and its 100% owned subsidiary, T Corporation, have filed consolidated tax returns for many years. Both corporations use the hybrid method of accounting and the calendar year as their tax year. During 2015 (Which is the current year for this problem), they report the operating results as listed in Table below.

Note the following additional information:

Flying Gator and T corporations are the only members of their controlled group.

Flying Gators address is 2101 W. University Ave, Gainesburg, FL 32611. Its employer identification number is 38-2345678. Flying Gator was incorporated on June 11, 2003. Its total assets are $430,000. Stephen Marks is Flying Gotors president.

A $50,000 consolidated NOL carryover from the preceding year is available. The NOL is wholly attributable to Flying Gator.

Flying Gator and T use the first-in, first-out (FIFO) inventory method. T began selling inventory to Flying Gator in the preceding year, which resulted $40,700 deferred intercompany profit at the end of the preceding year. Flying Gator is deemed realize this profit in the current year because it uses the FIFO method. During the current year, T sells additional inventory to Flying Gator, realizing a $300,000 profit. At the end of the current year, Flying Gator holds inventory responsible for $45,100 of this profit.

Flying Gator receives all its dividends from T. T receives all its dividends from a 60% owned domestic corporation. All distributions are from E&P.

Flying Gator receives all its interest income from T. T pays Flying Gator the interest on March 31 of the current year on a loan that was outstanding from October 1 of the preceding year through March 31 of the current year. Flying Gator and T did not accrue any interest at the end of the preceding year because they use the hybrid method of accounting. T pays $5,000 of its interest expense to a third party.

Officers salaries are $80,000 for Flying Gator and $65,000 for T. These amounts are included in salaries and wages in the table above.

Flying Gators capital losses include a $9,000 long-term loss on a sale of land to T in the current year. T holds the land at year-end.

The corporation have no non-recaptured net Sec. 1231 losses from prior tax years.

Qualified production activities income for Flying Gator is $340,000 and for T is ($35,000).

Estimate tax payment for the current year are $150,000

Determine the consolidated groups 2015 tax liability. Prepare the first page of the consolidated groups current year corporate income tax return (Form 1120). Hint: Prepare a spreadsheet similar to the one include in Appendix B to arrive at consolidated taxable income.

Income or Deductions Flying Gator Total 3,750,000 (2,200,000) $1,550,000 150,000 15,000 20,000 25,000 1,000 (3,000) $1,758,000 375,000 65,000 15,000 42,000 50,000 70,000 $1,250,000 1,500,000) (700,000) $550,000 50,000 Gross receipts Cost of goods sold Gross profit Dividends Interest Sec. 1231 gain Sec. 1245 gain Long-term capital gain (loss) Short-term capital gain (loss) $2,500,000 $1,000,000 100,000 15,000 20,000 25,000 6,000 (3,000) $648,000 200,000 40,000 5,000 24,000 20,000 48,000 (5,000) Total income Salaries and wages Repairs Bad debts Taxes Interest Charitable contributions Depreciation (other than that $1,110,000 175,000 25,000 10,000 18,000 30,000 22,000 included in cost of goods sold) Other expenses 85,000 160,000 40,000 260,000 125,000 420,000 $1,162,000 Total deductions 5 525,000 637.000 Separate return taxable income (before the USPAD, NOL ded., and DRD) S 585,000 11000 11,000 96,000 Income or Deductions Flying Gator Total 3,750,000 (2,200,000) $1,550,000 150,000 15,000 20,000 25,000 1,000 (3,000) $1,758,000 375,000 65,000 15,000 42,000 50,000 70,000 $1,250,000 1,500,000) (700,000) $550,000 50,000 Gross receipts Cost of goods sold Gross profit Dividends Interest Sec. 1231 gain Sec. 1245 gain Long-term capital gain (loss) Short-term capital gain (loss) $2,500,000 $1,000,000 100,000 15,000 20,000 25,000 6,000 (3,000) $648,000 200,000 40,000 5,000 24,000 20,000 48,000 (5,000) Total income Salaries and wages Repairs Bad debts Taxes Interest Charitable contributions Depreciation (other than that $1,110,000 175,000 25,000 10,000 18,000 30,000 22,000 included in cost of goods sold) Other expenses 85,000 160,000 40,000 260,000 125,000 420,000 $1,162,000 Total deductions 5 525,000 637.000 Separate return taxable income (before the USPAD, NOL ded., and DRD) S 585,000 11000 11,000 96,000