ParentCo Acquired All of the Stock of SubCo on January

question 33

Multiple Choice

ParentCo acquired all of the stock of SubCo on January 1,2009,for $1,000,000.The parties immediately elected to file consolidated income tax returns.SubCo generated taxable income of $150,000 for 2009 and paid a dividend of $100,000 to ParentCo.In 2010,SubCo generated an operating loss of $350,000,and in 2011 it produced taxable income of $75,000.As of the last day of 2011,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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Definitions:

Central Nervous System

Comprises the brain and spinal cord, responsible for processing and sending messages throughout the body.

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, responsible for connecting the CNS to limbs and organs.

Stressor

An event that creates a sense of threat by confronting a person with a demand or opportunity for change of some kind.

Stress Response

The body's way of reacting to a challenge or threat, involving a combination of biological changes and psychological responses.