**Core Concept**
Lichen planus is a chronic inflammatory mucocutaneous condition characterized by a distinctive histological pattern, which is essential for its diagnosis. The histological features of lichen planus include a band-like inflammatory infiltrate at the dermal-epidermal junction, basal cell degeneration, and the presence of colloid bodies.

**Why the Correct Answer is Right**
The correct answer is **C. Basal cell degeneration with colloid bodies and band-like inflammatory infiltrate at the dermal-epidermal junction**. The band-like inflammatory infiltrate is composed of lymphocytes, histiocytes, and sometimes eosinophils, which are arranged in a perpendicular direction to the epidermis. Basal cell degeneration occurs due to the damage to the basal layer of the epidermis by the inflammatory cells. Colloid bodies are collections of apoptotic keratinocytes that are seen in the upper dermis. These histological features are diagnostic of lichen planus.

**Why Each Wrong Option is Incorrect**
**Option A:** **Hyperkeratosis** is a feature of lichen simplex chronicus, not lichen planus.
**Option B:** **Squamous cell carcinoma** is a malignant condition that may mimic lichen planus, but it has different histological features.

**Clinical Pearl / High-Yield Fact**
Remember the "4 Ps" of lichen planus: **P**urple, **P**olygonal, **P**laque-like, and **P**ruritic lesions. This will help you to distinguish it from other dermatological conditions.

**Correct Answer: C. Basal cell degeneration with colloid bodies and band-like inflammatory infiltrate at the dermal-epidermal junction.**