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Question

Wilder Corp. and Iskra Corp. file consolidated tax returns. In January Year 1, Wilder sold land, with a basis of $60,000 and a fair value of $75,000, to Iskra for $100,000. Iskra sold the land in December Year 2 for $125,000. In the second year, what amount of gain should be reported for these transactions in the consolidated return? a) None b) $40,000 c) $60,000 d) $65,000 e) $75,000 Please explain your answer.

Submitted: 20 days and 7 hours ago.
Category: Tax
Value: $9
Status: CLOSED
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text book (federal income tax corporations), internet

Accepted Answer

Intercompany gain is eliminated in consolidation.

Hence the gain in Year 2 will be $125000 - $60000 which is $65000

Answer is d

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Expert: RD
Pos. Feedback: 99.4 %
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Answered: 11/2/2009

Certified Public Accountant (CPA)

CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..

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