Question

ear, Inc. generates a $100,000 net operating loss in the current year. Plum, Inc. generates $500,000 of taxable income. Compute the current year tax if Pear and Plum do/do not file a consolidated return.

Answer 1

Consolidated=$84,000

Not consolidated= $105,000

Step-by-step explanation:

Computation for the current year tax if Pear and Plum do/do not file a consolidated return.

Computation for Consolidated

Taxable income = ($500,000 - $100,000) x 21%

Taxable income =$400,000×21%

Taxable income = $84,000

Computation for Not consolidated

Not consolidated= $500,000 x 21%

Not consolidated= $105,000

Therefore the current year tax if Pear and Plum do/do not file a consolidated return will be :

Consolidated=$84,000

Not consolidated= $105,000