When Shares Are Transferred from One Group of Shareholders to Another

question 6

Multiple Choice

When shares are transferred from one group of shareholders to another and there is a change in control, which of the following is correct?

• A) Net capital losses arising prior to the change in control will be lost and any non-capital losses arising prior to the change in control may be used if the business that incurred the loss is terminated.
• B) Non-capital business losses arising prior to the change in control may be used against income from the business that incurred the loss if that business is carried on at a profit or reasonable expectation of profit in the year in which the losses are
• Applied.
• C) Non-capital losses are automatically deemed to have expired.
• D) Any net capital losses that arise following the change in control will be lost.

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Definitions:

Government Purchases

Expenditures made by local, state, or federal government sectors on goods and services that directly absorb resources.

Net Exports

The difference between a country's total exports of goods and services and its total imports of goods and services; net exports can be a positive or negative value.

Gross Investment

A company’s total investment in plant, equipment, and inventory. Also, a nation’s plant, equipment, inventory, and residential housing investment.

Depreciation

The process of allocating the cost of a tangible asset over its useful life.