Parent Corporation for Ten Years Has Owned All of the Stock

question 72

Multiple Choice

Parent Corporation for ten years has owned all of the stock of Subsidiary Corporation, which manufactures widgets. Parent's basis in Subsidiary's stock is $500,000. Subsidiary Corporation is insolvent and has no assets to redeem any of the stock that Parent Corporation owns when it liquidates. Nearly all of Subsidiary's gross income during the past five years has come from nonpassive activities. Parent can recognize

• A)a $500,000 short-term capital loss.
• B)a $500,000 long-term capital loss.
• C)a $500,000 ordinary loss.
• D)a $500,000 bad debt deduction.

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Definitions:

Efficient Supply Chain

The optimization of processes in the supply chain to ensure the fastest, most cost-effective way of getting products from production to consumer.

Lower-Price Retailer

A retail store offering products at prices lower than those of competitors, often by reducing operational costs or offering fewer services.

Customer Service Concept

A business philosophy centered around meeting or exceeding customer expectations to enhance satisfaction and loyalty.