ParentCo Acquired All of the Stock of SubCo on January

question 20

Multiple Choice

ParentCo acquired all of the stock of SubCo on January 1,2007,for $1,000,000.The parties immediately elected to file consolidated income tax returns.SubCo generated taxable income of $50,000 for 2007 and paid a dividend of $75,000 to ParentCo.In 2008,SubCo generated an operating loss of $350,000,and in 2009 it produced taxable income of $65,000.As of the last day of 2009,what was ParentCo's basis in the stock of SubCo?

• A)$1,000,000.
• B)$690,000.
• C)$340,000.
• D)$0.

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