Calendar Year ParentCo Acquired All of the Stock of SubCo

Multiple Choice

Calendar year ParentCo acquired all of the stock of SubCo on January 1,2012,for $1,000,000.The parties immediately elected to file consolidated income tax returns.SubCo generated taxable income of $150,000 for 2012 and paid a dividend of $100,000 to ParentCo.In 2013,SubCo generated an operating loss of $350,000,and in 2014 it produced taxable income of $75,000.As of the last day of 2014,what was ParentCo's basis in the stock of SubCo?

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