In a tax-free business combination,
A. the income tax basis for acquired assets and liabilities is adjusted to current fair value.
B. any goodwill created by the combination may be amortized in calculating taxable income.
C. the subsidiary's assets and liabilities are assigned an income tax basis of zero dollars, so that they will have no future income tax consequences.
D. any goodwill created by the combination must be deducted in total in calculating taxable income.
E. the subsidiary's cost basis for assets are retained for income tax calculations.

The answer here would be option E. given in the answer choices or the subsidiary's cost basis for assets are retained for income tax calculations.

Explanation:

A subsidiary can be identified as an autonomous and independent business organization which operates under the parent or the original company.The parent company or the original organization typically owns 50% or more stock or share in business and if it has absolute or full control over the subsidiary company, then it is commonly known as Wholly Owned Subsidiary.To obtain the benefits of the tax-free business combination under a subsidiary based business structure or planning, the estimation of the costs and expenses of the business assets officially listed by the subsidiary in its respective accounting books have to be legitimately reported or filed under income tax calculations.

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