Calendar Year ParentCo Purchased All of the Stock of SubCo

question 108

Multiple Choice

Calendar year ParentCo purchased all of the stock of SubCo on January 1,2012,for $500,000.SubCo produced a loss for 2012 of $150,000 and distributed cash of $25,000 to ParentCo.In 2013,SubCo generated a loss of $450,000;in 2014,it recognized net income of $45,000.What is ParentCo's capital gain or loss if it sells all of its SubCo stock to a nongroup member on January 1,2015,for $50,000?

• A)$130,000.
• B)$50,000.
• C)($80,000).
• D)($50,000).

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Definitions:

Technological Change

The improvement or innovation in technology that increases productivity and may lead to new products or ways of doing things.

Solar Panels

Photovoltaic (PV) devices or arrays that convert sunlight directly into electricity.

Efficiency

The ability to achieve a desired result or output with the least waste of time, effort, or resources.

Equity

Fairness.