Identify Which of the Following Statements Is True

question 68

Multiple Choice

Identify which of the following statements is true.

• A)To qualify for Sec. 351 treatment, control is defined as more than 50% ownership of the voting stock, and more than 50% of all other classes of stock.
• B)If a shareholder receives stock with an FMV greater than the FMV of the property exchanged in a Sec. 351 transaction, the excess FMV may be considered a gift from one shareholder to another shareholder.
• C)Only transfers to newly created corporations qualify for Sec. 351 treatment.
• D)All of the above are false.

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Definitions:

Available-For-Sale

A classification for financial assets indicating that they can be sold in the future but are not held for active trading or intended to be held to maturity.

Net Income

This is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, often referred to as the bottom line.

Trading Securities

Trading securities are a form of investments that a company plans to buy and sell over a short period of time with the intention of profiting from the market movements.

Realized Gain

The profit made from the sale of an asset, recognized when the asset is actually sold and the transaction is complete.