In Year 1, Liz acquired 100% of the stock of Gibraltar, Inc., for $10,000 in cash. Gibraltar incurred a loss of $3,000 for Year 1. On January 1, Year 2, Liz elected S corporation status for Gibraltar. Gibraltar's net income for Year 2 was $5,000. Gibraltar declared and paid a dividend of $2,000 in Year 2. What is Liz's basis in Gibraltar stock on December 31, Year 2? A. $13,000 B. $7,000 C. $3,000 D. $5,000