ParentCo Acquired All of the Stock of SubCo on January

question 89

Multiple Choice

ParentCo acquired all of the stock of SubCo on January 1, 2011, for $1,000,000. The parties immediately elected to file consolidated income tax returns. SubCo generated taxable income of $150,000 for 2011 and paid a dividend of $100,000 to ParentCo. In 2012, SubCo generated an operating loss of $350,000, and in 2013 it produced taxable income of $75,000. As of the last day of 2013, what was ParentCo's basis in the stock of SubCo?

• A) $1,000,000.
• B) $875,000.
• C) $775,000.
• D) $0.

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Dichotomous Conceptualization

The classification of phenomena into two distinct and mutually exclusive categories.

Counseling Profession

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