Which of the Following Actions Cannot Be Used to Eliminate

question 52

Multiple Choice

Which of the following actions cannot be used to eliminate a possible personal holding company tax liability involving a corporation owned by a mother and a father?

• A) Make a cash distribution within 2 1/2 months of the end of the tax year.
• B) Make a deficiency distribution within 90 days of the date on which the IRS determines that a personal holding company liability is owed.
• C) Sell additional stock to other family members.
• D) Liquidate the corporation.

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Definitions:

Income Statement

A financial document that reports a company's revenues, expenses, and profits over a specific period, showing how the revenues translate into net income.

Balance Sheet

A financial statement that presents the assets, liabilities, and shareholders' equity of a company at a specific point in time.

Factory Overhead

All indirect costs associated with manufacturing, including utilities, maintenance, and management salaries not directly tied to production.

Work in Process

Materials and products that are partially completed but not yet finished goods in the manufacturing process.