LO.5 Huge Corporation and its wholly owned subsidiary, Whit Corporation, file Federal tax returns on a separate basis. Huge manufactures postage meters, and Whit provides mail-order services to a cross section of clients in the state.

Huge uses a calendar tax year, while Whit files using an April 30 year-end. Huge’s gross receipts for the year total $15 million, and Whit’s are $3.5 million. Identify some Federal income tax issues as to accounting periods and methods that the group would face if the corporations elected to consolidate.