Remarkable Corporation is an affiliated group of six corporations that files a consolidated tax return each year. Remarkable Corporation has engaged you for advice on ending the requirement to file a consolidated tax return. Analyze the rules for terminating consolidated tax returns. Based on your analysis, make a recommendation to Remarkable Corporation as to a strategy to end the practice filing a consolidated return. Support your response with examples.
Assume Remarkable is successful and gets a ruling from IRS that allows each of the six corporations to file individual corporate tax returns. Evaluate the potential tax impacts that the six companies might face post consolidation and explain the specific tax issues they must consider.
Copper Corporation and Gold Corporation are considered affiliate companies. Both companies have significant transactions between each company. Evaluate the tax impacts of inter company transactions and determine the most likely types of transactions that will trigger a taxable event. Based on your evaluation, make a recommendation to Copper and Gold as to how they can avoid taxable transactions. Assume you are an IRS agent assigned to audit the inter company transactions between Bing Corporation and Cherry Corporation. Evaluate potential high risk inter company transactions and choose the types of transactions you would most likely test for default. Support your response with examples