Under the consolidated return rules, the realized gain from an intercompany transaction is deferred. For most taxpayers, this produces:
A) An advantage in terms of the time value of money.
B) A disadvantage in terms of the time value of money.
C) A compliance issue that cannot be resolved.
D) A 20% penalty on the consolidated group.

Question

Quizplus · Accepted Answer

Deferring the realized gain from an intercompany transaction allows taxpayers to delay tax payments on that gain, which can be advantageous in terms of the time value of money because it frees up cash for other investments or expenses in the meantime.

Under the Consolidated Return Rules, the Realized Gain from an Intercompany