Calendar Year ParentCo Purchased All of the Stock of SubCo

Multiple Choice

Calendar year ParentCo purchased all of the stock of SubCo on January 1, year 1, for $500,000. In year 1, SubCo produced a loss of $150,000 and distributed cash of $25,000 to ParentCo. In year 2, SubCo generated a loss of $450,000; in year 3, it recognized net income of $90,000. What is ParentCo's capital gain or loss) if it sells all of its
SubCo stock to a nongroup member on year 4 for $150,000?

A) $185,000
B) $150,000
C) $35,000)
D) $535,000)
E) All gain/loss is ordinary when subsidiary stock is sold.