Parent Corporation, which operates an electric utility, created a 100%-owned corporation, Subsidiary that built and managed an office building. Assume the two corporations have filed separate tax returns for a number of years. The utility occupied two floors of the office building, and Subsidiary offered the other ten floors for lease. Only 25% of the total rental space was leased because of the high crime rate in the area surrounding the building. Rental income was insufficient to cover the mortgage payments, and Subsidiary filed for bankruptcy because of the poor prospects. Subsidiary’s assets were taken over by the mortgage lender. Parent lost its entire $500,000 investment. Another $100,000 of debts remained unpaid for the general creditors, which included a $35,000 account payable to Parent, at the time Subsidiary was liquidated. What tax issues should Parent and Subsidiary consider with respect to the bankruptcy and liquidation of Subsidiary?