WhaleCo acquired all of the common stock of MinnowCo early in year $1$ for $$900,000,$ and MinnowCo immediately elected to join WhaleCo's consolidated Federal income tax return. As part of the takeover, WhaleCo also acquired $$300,000$ of MinnowCo bonds. The results of MinnowCo for the first few years of the group operations were reported as follows:

Tax year Operating gain $/$Loss

$1$ $$100,000$

$2(800,000)$

$3(600,000)$

WhaleCo has determined that it will sell all of its MinnowCo stock at the end of year $3$ for $$250,000.$

What is WhaleCo's basis in the stock at the time of the sale?

Taking into account the rules regarding excess loss accounts, determine WhaleCo's gain or loss from its sale of the MinnowCo stock. MinnowCo is fully solvent.