Home / CPA Course / TCP

C corporation losses and consolidated returns

TCP Chapter 6 · Area II · Blueprint II.A.1, II.A.3

Corporations have bad years, and the tax rules decide how much a loss is worth later. Net operating losses carry forward without end but can offset only 80% of income; capital losses can offset only capital gains and expire after five years; and an ownership change can shrink the use of old losses to a trickle. A group of corporations can also file one consolidated return, offsetting one member's loss against another's profit, with intercompany profits held back until they leave the group. Tessa and Leo work with Harbor Point Holdings, Inc. and its two subsidiaries, Brightwater Brewing and Tidewater Logistics. Figures are for 2026.

In this chapter

1. Computing a corporate net operating loss
2. Using NOL carryforwards: the 80% limit
3. Corporate capital losses
4. Ownership changes and §382
5. Who may file a consolidated return
6. Computing consolidated taxable income

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Net operating and capital loss utilization
• §382 after an ownership change
• affiliated groups and Form 851
• intercompany transactions
• consolidated NOLs and SRLY

Chapter 5: C corporations and their shareholders · Chapter 7: International tax basics