Shareholders in Boxer Corporation Exchange All of Their Nonvoting Class

question 33

Multiple Choice

Shareholders in Boxer Corporation exchange all of their nonvoting Class B common stock for additional shares of Boxer's Class A common stock. Which of the following statements is correct?

• A)If boot is added to the exchange, the entire gain realized on the exchange is recognized in full.
• B)The exchange is a Type F reorganization, assuming all requirements are met.
• C)The exchange is tax-free even if no plan of reorganization has been created.
• D)The basis of the Class A common stock received is equal to its FMV.

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Definitions:

Double Taxation

The incidence where income is taxed twice; this usually occurs when income is taxed at both the corporate level and personal level.

Corporate

Pertaining to corporations, large companies recognized by law as single entities distinct from their owners, with legal rights and responsibilities.

Corporations

Legal entities that are separate from their owners, allowing them to own assets, incur liabilities, and conduct business in their own name.

Business Sales

The total receipts a company generates from selling its goods or services over a specific period of time.