ParentCo Purchased All of the Stock of SubCo on January

question 66

Multiple Choice

ParentCo purchased all of the stock of SubCo on January 1,2007,for $900,000.SubCo produced a loss for 2007 of $275,000 and distributed cash of $15,000 to ParentCo.In 2008,SubCo generated a loss of $850,000; in 2009,it recognized net income of $15,000.What is ParentCo's capital gain or loss if it sells all of its SubCo stock to a nongroup member on January 1,2010,for $50,000?

• A)($210,000).
• B)($850,000).
• C)$50,000.
• D)$275,000.
• E)Some other amount.

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Definitions:

Complaint

A formal legal document that initiates a lawsuit, detailing the facts and legal reasons the plaintiff believes are sufficient to support a claim against the defendant.

Enforceable Oral

Pertaining to oral agreements that are legally binding and can be enforced in a court of law, depending on the nature of the agreement and the jurisdiction.

Renovated

Renovation refers to the process of restoring or improving a structure, often bringing new life and functionality to an old or damaged building.

Deposit

A sum of money placed in trust or paid as an initial part-payment in a purchasing process to secure an agreement.