Boulder Corporation owns all of the stock of PebbleCo, so they constitute a Federal affiliated…

Boulder Corporation owns all of the stock of PebbleCo, so they constitute a Federal affiliated group and a parent-subsidiary controlled grBoulder Corporation owns all of the stock of PebbleCo, so they constitute a Federal affiliated group and a parent-subsidiary controlled group. By completing the following chart, delineate for Boulder’s tax department some of the effects of an election to file Federal consolidated income tax returns.

Situation If the Group Files a Consolidated Return

If Separate Income Tax Returns Continue to be Filed

a. PebbleCo pays a $1,000,000 cash dividend to Boulder.

b. Boulder’s tax liability is $95,000, and Pebble’s liability totals $75,000.

c. Boulder uses the LIFO method for its inventories, but Pebble wants to use FIFO for its own inventories.

oup. By completing the following chart, delineate for Boulder’

 
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