On July 1, 2010, P Corporation acquired all the stock of S Corporation for $12,000 and included S Corporation in its US Consolidated tax return. On the acquisition date, S has accumulated earnings and profits of $7,000. During the period July1-December 31, 2010, S Corporation incurred a taxable loss of $2,000. S Corporation had earnings of $1,800 in 2011, and made a distribution of $5,000 to P Corporation on October 1. In 2012, S Corporation incurred a taxable loss of $1,300.

Determine Ps basis in S stock as of December 31, 2012.

What are the requirements for S to be included in P Corporation's US consolidated tax return?