Grant Corporation Transfers Highly Appreciated Stock to Subsidiary Corporation in Exchange

question 16

Multiple Choice

Grant Corporation transfers highly appreciated stock to Subsidiary Corporation in exchange for all of its stock. The Subsidiary Corporation stock is distributed to its sole shareholder, Peter. Three weeks after the distribution of the Subsidiary stock, Subsidiary Corporation liquidates. Peter then sells the appreciated stock that he received in the liquidation. This series of transactions

• A)does not meet the statutory definition of a divisive Type D reorganization.
• B)fails the business purpose requirement.
• C)results in a capital gain to Peter.
• D)None of the above is correct.

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Definitions:

Personal Troubles

Individual challenges and problems that are experienced by a person, often considered in the context of wider societal issues.

Social Issues

Problems faced by large numbers of people within a society, which often require intervention by public policy or social services.

Homelessness

A state of having no permanent residence, often resulting from a variety of social and economic factors.

Sociological Perspective

An approach to understanding human behavior by placing it in a broader social context, considering societal influences and structures.