Calendar Year ParentCo Purchased All of the Stock of SubCo

question 123

Multiple Choice

Calendar year ParentCo purchased all of the stock of SubCo on January 1, year 1, for $500,000. In year 1, SubCo produced a loss of $150,000 and distributed cash of $25,000 to ParentCo. In year 2, SubCo generated a loss of $450,000; in year 3, it recognized net income of $90,000. What is ParentCo's capital gain or loss) if it sells all of its
SubCo stock to a nongroup member on year 4 for $150,000?

• A) $185,000
• B) $150,000
• C) $35,000)
• D) $535,000)
• E) All gain/loss is ordinary when subsidiary stock is sold.

---

Definitions:

Scope

The range of coverage, influence, or action; the extent of what is considered or dealt with.

Quick Parts

Pre-designed templates or snippets in word processors that can be inserted into documents to save time.

Word 2010

A version of Microsoft Word, part of the Microsoft Office 2010 suite, offering enhanced features for document creation and editing.

Project Planning Tools

Software applications or methodologies designed to assist in organizing, managing, and tracking the progress of projects.