USA Question about consolidated tax return

[Ajeremy99]

If a parent company uses cash method and its subsidiary uses accrual method, when filing a consolidated 1120 can you use both methods on the form?

 

[kirby]

Keep in mind that if the consol corp has gross receipts over $5 million it cannot file using cash method. Assuming that doesnt apply to you next you look at what method the corp elected to use per its first return and worksheet adjust your workpapers to achieve that method.

 

[Ajeremy99]

After spending hours thinking about this I realized that I am asking the wrong question. The corporation I work for is a subsidiary. We use the accrual accounting for our books. Our parent company uses cash. We do have less than 5 million of gross receipts. So, when producing the consolidated financials, and with the intention of using cash method for the 1120, the financials from the subsidiary should be adjusted to cash method for consolidation?

 

[kirby]

Given that the cosol entity elected to file using cash method and has less than $5 million of gross receipts then yes the sub data should be adjusted to cash method