Identify Which of the Following Statements Is True

question 91

Multiple Choice

Identify which of the following statements is true.

• A) The assignment of income doctrine does not apply if the transferor in a Sec. 351 exchange in which no gain is otherwise recognized transfers when a sole proprietor transfers substantially all the assets and liabilities of the transferor's trade or business to a controlled corporation.
• B) The assignment of income doctrine is a legislative requirement that income be taxed to the person who earns it.
• C) The assignment of income doctrine requires a cash method of accounting for a transferor/shareholder to recognize income when accounts receivable are transferred by the shareholder to the corporation in a Sec. 351 exchange in which no gain is otherwise recognized.
• D) All of the above are false.

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Definitions:

Precedent

A legal principle, established in a previous legal case, that is either binding or persuasive for a court when deciding subsequent cases with similar issues or facts.

Radio Station

An establishment equipped for transmitting audio programs to the public, typically featuring a mix of music, news, and discussion on various topics.

Charter

Charter refers to the official authorization or a document of rights granted, typically for operating a vessel or aircraft, or establishing an institution or corporation.

Legislation

Laws or statutes that have been enacted by a governing body.