Identify Which of the Following Statements Is True

question 33

Multiple Choice

Identify which of the following statements is true.

• A) 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.
• B) 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.
• C) 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.
• D) All of the above are false.

---

Definitions:

Adverse Selection Problem

A problem arising when information known to one party to a contract or agreement is not known to the other party, causing the latter to incur major costs. Example: Individuals who have the poorest health are most likely to buy health insurance.

Common Good Problem

Common Good Problem occurs when resources that are freely accessible to all members of a society are overused or depleted, often leading to sustainability issues.

Special-Interest Effect

The phenomenon where policy decisions are influenced or shaped by the lobbying efforts of a small, focused group, often at the expense of the general public.

Political Parties

Organizations that seek to attain and maintain political power within a government, typically by participating in electoral campaigns, educational outreach, or protest actions.