Which of the Following Is Not a Characteristic of an S

question 52

Multiple Choice

Which of the following is not a characteristic of an S corporation?

• A)Must be formed under state law
• B)The transfer of property for stock is always tax-free
• C)A shareholder's share of ordinary income increases his or her stock basis
• D)The shareholder never recognizes loss on a nonliquidating distribution

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Definitions:

Cash Payment

A transaction in which a payment is made in the form of physical currency or through a digital mechanism but representing immediate transfer of funds.

Merchandise

Goods or products that are bought and sold by businesses in the course of their trade or business operations.

Sales Returns and Allowances

Transactions in which customers return damaged or unsatisfactory products for refunds or credit, and adjustments made to sales revenue for these returns or granted concessions.

Accounts Receivable

Outstanding payments from customers to a firm for delivered or utilized goods or services awaiting settlement.