Consolidated Net Operating Losses and Intercompany Transactions” Please respond to the following:

• A client is pursuing the acquisition of Corporation A that has a substantial net operating loss. Corporation B is a member of the controlled group and is currently included in the consolidated tax return that also has a net operating loss. Analyze the potential advantages and disadvantages of Corporation B’s acquisition of Corporation A and Corporation A’s subsequent inclusion in Corporation B’s consolidated tax return. Suggest the key tax issues the client should consider in determining the deductibility of the net operating losses.

• From the e-Activity, create a tax-planning strategy for a client geared toward complying with the final regulations issued by the IRS under Code Section 267 (f). (Note: Code Section 267 (f) discusses the time taken into account for deferred losses on the sale or exchange of property between members of a controlled group.) Recommend the alternatives that you believe would be best suited for the client to use in order to both take advantage of losses between members and remain in compliance with related regulations. Justify your response.

WEEK 5 DISCUSSION 2

Consolidated Tax Returns” Please respond to the following:

• Corporations P, S, and C are members of a parent-subsidiary controlled group filing a consolidated tax return. Corporations A and B are members of a brother-sister controlled group that cannot file a consolidated tax return. Design a strategy geared toward creating an affiliated group which makes Corporations A, B, P, S, and C all eligible to file a consolidated tax return.
• Assess the adequacy of the schedule M-3 Part 1 in creating transparency between the consolidated financial statements and the consolidated tax returns of the corporations discussed in the first part of this discussion. Suggest at least two (2) modifications to the M-3 that you can use to identify possible issues the IRS would most likely examine on a consolidated tax return.

WEEK 6 DISCUSSION 1

Partnership Tax Year” Please respond to the following:

• The IRC restricts the choices for a partnership‘s tax year to prevent the deferral of tax. This causes most partnerships to adopt a calendar year for tax reporting. From the e-Activity, create a scenario using a fiscal tax year which allows a partnership to defer taxes that meet the requirements of Sections 706 and 444 of the IRC.
• Suggest at least one (1) major reason why Congress allowed the exception to the calendar year for partnership tax year elections.

WEEK 6 DISCUSSION 2

Limited Liability Partnerships” Please respond to the following:

• As discussed in the text, large accounting firms and other professional firms operate as limited liability partnerships (LLPs). Contrast the LLP form of business under state laws to the LLP for tax purposes.
• Suggest the major reasons why a new entity would choose a LLP over a traditional partnership for tax purposes.