Wave Corporation Owns 90% of the Stock of Surf, Inc $\quad$

Wave Corporation owns 90% of the stock of Surf, Inc. Each corporation reports the following separate items for the current tax year:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Wave $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Surf
Ordinary operating income (loss) $\quad$ $\quad$ $\quad$ $ 500,000 $\quad$ $\quad$ $\quad$ $ (100,000 )
Capital gain (loss) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ (5,000 ) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 7,000
Section 1231 gain (loss) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 3,000 $\quad$ $\quad$ $\quad$ $\quad$ (10,000 )
Compute consolidated taxable income if Wave and Surf file a consolidated federal income tax return:

A) $400,000.
B) $395,000.
C) $410,000.
D) $500,000.