Identify Which of the Following Statements Is True

question 28

Multiple Choice

Identify which of the following statements is true.

• A)A parent corporation cannot liquidate a subsidiary corporation (having but a single class of stock)and avoid recognizing its realized gain unless the parent corporation owns at least 80% of the subsidiary's stock.
• B)The liquidation of a subsidiary corporation must be completed within one tax year to receive nonrecognition treatment.
• C)The provisions permitting a tax-free liquidation of a subsidiary corporation apply to both corporate and noncorporate shareholders of the subsidiary.
• D)All of the above are false.

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Definitions:

Anticipation

The act of expecting or foreseeing something, often relating to economic expectations about future market trends or government policies.

Expected Inflation Rate

The rate at which consumers, businesses, and investors anticipate prices will rise in the foreseeable future, influencing economic behavior.

Nominal Interest Rate

The interest rate before adjustments for inflation, reflecting the rate of return as stated by the financial institution.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.