The Group of Parent Corporation, SubOne, and SubTwo Has Filed

The group of Parent Corporation, SubOne, and SubTwo has filed a consolidated return since Year 2. The first two entities were incorporated in Year 1, and SubTwo came into existence in Year 2 through an asset spin-off from Parent. Taxable income computations for the members are shown below. None of the group members incurred any capital gain or loss transactions during any of the following any of the following years, nor did they make any charitable contributions.
Describe the treatment of the group's Year 3 consolidated NOL. Hint: Apply the offspring rule. $\begin{array}{ccccc} & \text { Parent's } & \text { SubOne's } & \text { Sub Two's } & \text { Consolidated } \\& \text { Taxable } & \text { Taxable } & \text { Taxable } & \text { Taxable } \\\text { Year } & \text { Income } & \text { Income } & \text { Income } & \text { Income }\\\hline\text { Year 1 } & \$ 200,000 & \$ 70,000 & - & \$ 270,000 \\\text { Year 2* } & \$ 90,000 & \$ 20,000 & (\$ 40,000) & \$ 70,000 \\\text { Year 3* } & \$ 90,000 & (\$ 80,000) & (\$ 40,000) & ? \\\text { Year 4* } & \$ 90,000 & \$ 100,000 & \$ 210,000 & ?\end{array}$
$\text { * Consolidated return year. }$