Corporation P and its subsidiary S file consolidated returns on a calendar-year basis, and on September 30, 20X1, P sells all the stock of S. For the calendar year 20X1, what tax returns must be filed?

1. P will file a consolidated return for the period January 1 through September 1, 20X1, and a separate return from October 1, 20X1 to December 31, 20X1
2. P will file a separate tax return for the entire calendar year excluding the S income.
3. P will file a single consolidated return and include the income of P for the entire year 20X1 and the income of S for the period January 1 through September 30.
4. S will file a separate return for the entire calendar year.