The SRLY rules for consolidated tax returns are designed to keep corporations from trafficking their net operating losses. Explain. Solution The SRLY ( Seperate Return Limitation Year) is applicable in case of consolidation of financial statement of parent company with subsidary companies. According to this rules if a company take over by another company where the subsidary company having losses in that case its losses cannot be merge with the profit of parent company at the time of consolidation. the subsidary company have to file a seperate return till the losses turn into profit. This rule is mainly made to keep the track of losses of coperate sector & to show the actual picture of the corporate groups. By following this rules Coperates are not allowed to hide the losses by merging with another company. Secondly they can\'t take the benefit of tax by adjusting losses with profit. Thirdly the true picture of every entity is showed so that stakeholders can\'t be cheated. .

1. The SRLY rules for consolidated tax returns are designed to keep corporations from trafficking
their net operating losses. Explain.
Solution
The SRLY ( Seperate Return Limitation Year) is applicable in case of consolidation of financial
statement of parent company with subsidary companies.
According to this rules if a company take over by another company where the subsidary
company having losses in that case its losses cannot be merge with the profit of parent company
at the time of consolidation. the subsidary company have to file a seperate return till the losses
turn into profit.
This rule is mainly made to keep the track of losses of coperate sector & to show the actual
picture of the corporate groups. By following this rules Coperates are not allowed to hide the
losses by merging with another company. Secondly they can't take the benefit of tax by
adjusting losses with profit. Thirdly the true picture of every entity is showed so that
stakeholders can't be cheated.