How are the members of a Federal consolidated group affected by computations related to E & P?
A) Each member keeps its own E & P account.
B) E & P is computed solely on a consolidated basis.
C) Members' E & P balances are frozen as long as the consolidation election is in place.
D) Consolidated E & P is computed as the sum of the E & P balances of each of the group members, computed on the last day of the tax year.

Question

Quizplus · Accepted Answer

DEarnings and Profits (E & P) are important for determining dividend distributions and other tax-related matters. In a Federal consolidated group, each member maintains its own E & P account (A), and the consolidated E & P is computed as the sum of the E & P balances of each of the group members, computed on the last day of the tax year (D). This approach allows for the accurate tracking of each member's contribution to the group's overall E & P while still recognizing the group's consolidated financial position.

How Are the Members of a Federal Consolidated Group Affected