Identify Which of the Following Statements Is False

question 59

Multiple Choice

Identify which of the following statements is false.

• A) The holding period for stock rights includes the holding period for the underlying stock.
• B) The distribution of stock rights is generally tax free under Sec. 305.
• C) The distribution of stock rights will be taxable if the value of the stock rights is more than 15% of the value of the underlying stock.
• D) If the value of stock rights is less than 15% of the value of the underlying stock, the basis of the rights is zero unless the shareholder elects to allocate basis to the rights.

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Definitions:

Entitled to Payment

Having a legitimate claim or right to receive a specific sum of money.

Unkempt

Refers to an appearance or condition that is messy, disorderly, or not properly maintained.

Entitled to Payment

Refers to having a legal right or claim to receive a specified amount of money for goods provided, services rendered, or as compensation.

Carlill v. Carbolic Smoke Ball Co.

A landmark 1892 English court case that established important principles in contract law, particularly in regard to unilateral contracts.