Calendar Year Parent Corporation Acquired All of the Stock of SubCo

Essay

Calendar year Parent Corporation acquired all of the stock of SubCo on January 1, Year 1, for $500,000. The subsidiary's operating gains and losses are shown below. In addition, a $50,000 dividend is paid early in Year 2.
Complete the following chart, indicating the appropriate stock basis and excess loss account amounts. $\begin{array}{llll}&&& \text { Excess } \\& \text { Operating } & \text { Stock } & \text { Loss } \\\text { Year } & \text { Gain } / \text { Loss } & \text { Basis } & \text { Account }\\1 & (\$ 100,000) & ? & ? \\2 & (\$ 150,000) & ? & ? \\3 & \$ 300,000 & ? & ?\end{array}$