Question

When an affiliated group filing a consolidated tax return acquires a new member who has never consented to the regulations, which of the following is true?

A. A form 1122 must be filed by the newly acquired subsidiary.

B. A new form 1122 must be filed by the common parent corporation.

C. No consents are required to be filed after the initial consolidated return year.

D. The entire group is required to submit a form 1122

Answer 1

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When an affiliated group filing a consolidated tax return acquires a new member who has never consented to the regulations, which of the following is true?

A. A form 1122 must be filed by the newly acquired subsidiary.

B. A new form 1122 must be filed by the common parent corporation.

C. No consents are required to be filed after the initial consolidated return year.

D. The entire group is required to submit a form 1122.

Answer is option A

A. A form 1122 must be filed by the newly acquired subsidiary.

Reason- Each subsidiary must authorize and consent its inclusion in the consolidated return. This consent requires an officer of each subsidiary to furnish the Parent company with Form 1122. The parent corporation- the affiliated group member that’s responsible for filing the return- must attach a copy of each subsidiary Form 1122 with its initial consolidated return. In future tax years, Form 1122 is only required for new affiliated group member corporations that are included on the consolidated return for the first time.