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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Wilder Corp. and Iskra Corp. file consolidated tax returns.

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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.
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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