Before a Company Can Be Would Up by Its Shareholders

question 16

Multiple Choice

Before a company can be would up by its shareholders, its directors must make a declaration of solvency.This is a declaration that:

• A)The shareholders believe that the company is insolvent.
• B)The directors believe that the company will be able to pay all its debts within 12 months after the commencement of the winding up.
• C)The directors believe that the company has no significant debts.
• D)The directors believe that the company should not be wound up.

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Definitions:

Tax Authority

The governmental agency responsible for the administration of tax laws, collection of taxes, and enforcement of tax regulations.

Internal Revenue Code

The federal statute that codifies all the United States tax laws, including income tax, payroll tax, gift tax, estate tax, and many other types of taxes.

Tax Liability

The total amount of tax that an individual or entity is legally obligated to pay to a taxing authority based on income, property value, transactions, or other taxable events.

Wage-Earning Taxpayers

Individuals who receive income in the form of wages, salaries, or tips from employment.