LO.3 Giant Corporation owns all of the stock of PebbleCo, so they constitute a Federal affiliated group and a parent-subsidiary controlled group. By completing the following chart, delineate for Giant’s tax department some of the effects of an election to file Federal consolidated income tax returns.

Situation If the Group Files a Consolidated Return If Separate Income Tax Returns Continue to Be Filed

a. PebbleCo pays a $1 million cash dividend to Giant. ___________ ___________

b. Taxable income for both group members this year is $50,000. ___________ ___________

c. Giant’s tax liability is $95,000, and Pebble’s liability totals $75,000. ___________ ___________

d. Giant uses the LIFO method for its inventories, but Pebble wants to use FIFO for its own inventories. ___________ ___________