Identify Which of the Following Statements Is True

question 23

Multiple Choice

Identify which of the following statements is true.

• A)A split-off Type D reorganization occurs when part of the assets of one corporation are transferred to a controlled corporation in exchange for its stock, and shares of the controlled corporation's stock are distributed to all of the distributing corporation's shareholders without having them surrender any of their stock in the distributing corporation.
• B)In a Type D reorganization, the existence of a good corporate business purpose is necessary before the stock of a controlled subsidiary can be distributed to the shareholders of the distributing corporation.
• C)A distribution of a controlled corporation's stock can be a tax-free Type D reorganization, even if none of the distributing corporation's assets are transferred to the controlled corporation.
• D)All of the above are false.

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Definitions:

Fixed Manufacturing Overhead

The costs associated with manufacturing that do not vary with the level of production output, including rent of the facility and salaries of the staff.

Variable Selling

Costs that vary directly with the level of sales activity, such as commissions or shipping charges.

Administrative Expense

Expenses related to the general operation of a business, such as office supplies, management salaries, and utilities.

Fixed Selling

Costs that remain constant regardless of the volume of goods or services sold.