Spin-Offs Are Not Taxed If the Shareholders of the Parent

question 15

Multiple Choice

Spin-offs are not taxed if the shareholders of the parent company are given at least

• A)90 percent of the shares in the new company.
• B)80 percent of the shares in the new company.
• C)70 percent of the shares in the new company.
• D)60 percent of the shares in the new company.

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Definitions:

Mutually Exclusive

A situation or decision-making scenario where the acceptance of one option necessarily means the rejection of another.

Discounted Payback

The period of time required for the return on an investment to cover the cost of the investment, accounting for the time value of money.

Rate of Return

The increase or decrease in value of an investment during a specific duration, represented as a percentage of the investment's starting cost.

Cash Inflow

The total amount of money being transferred into a company, typically from operations, investments, and financing activities.