Identify Which of the Following Statements Is True

question 27

Multiple Choice

Identify which of the following statements is true.

• A) An accrual method of accounting taxpayer recognizes his/her realized gain on a corporate liquidation when there has been actual or constructive receipt of the liquidating distribution(s).
• B) The method of accounting used by shareholders involved in a complete liquidation is relevant when determining the year in which the shareholder's gain or loss should be reported.
• C) If a shareholder assumes or acquires liabilities of the liquidating corporation, the amount of these liabilities does not reduce the amount realized by the shareholder.
• D) All of the above are false.

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Definitions:

Porous

Characterized by the presence of tiny holes or spaces through which liquids or gases can pass, making the material permeable.

Precipitation

Any form of water, liquid or solid, that falls from the atmosphere and reaches the ground, including rain, snow, sleet, and hail.

Erosion

Erosion is the natural process by which soil, rock, and other surface material are worn away and transported by natural forces, such as water or wind.

Condense

To reduce something, such as a text or statement, to make it shorter, while retaining the essential information or to change the physical state of a substance from gas to liquid.