Tom and Bob Are Equal Shareholders of a Profitable Company

question 2

Multiple Choice

Tom and Bob are equal shareholders of a profitable company with only active business income. The company is growing and dividend payouts are increasing. The two men have heard that 'holding corporations' might suit their needs. Which of the following would apply?

• A) The holding companies would receive the dividends from the operating company, free of tax, to be invested in ventures of Tom and Bob's separate choices.
• B) Dividends would flow from the operating company to Tom and Bob, and then to the holding corporations.
• C) Dividends received by the holding companies from the operating company must be invested in the same ventures.
• D) The establishment of holding corporations would allow Tom and Bob to access the profits of the operating company for personal expenditures without paying a second level of tax.

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Definitions:

Generative Needs

The psychological drive to produce or contribute to the well-being of others and future generations, often associated with creativity and care.

Domestic Abuse

A pattern of behavior in any relationship that is used to gain or maintain power and control over an intimate partner.

Increased Income

Refers to a situation where there is a rise in the amount of money earned from employment, investments, or other sources.

Empty Nest

A phase in a parent's life marked by the feelings of sadness or loss when their last child moves out of the family home, often leading to adjustments in lifestyle and relationships.