At the end of each consolidated return year, the parent's basis in the stock of a subsidiary must be adjusted to reflect the economic results of operation.This is accomplished by:

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The parent's basis in the stock of a subsidiary must be adjusted to reflect the economic results of operation. This adjustment is made by increasing the parent's basis by any undistributed gains of the subsidiaries and reducing the basis by any losses sustained by the subsidiaries. This adjustment ensures that the parent's basis in the stock of the subsidiary reflects the economic reality of the subsidiary's operations.

At the End of Each Consolidated Return Year, the Parent's