Which of the Following Requirements Does Not Have to Be

question 89

Multiple Choice

Which of the following requirements does not have to be met in a §351 transaction?

• A) Each transferor of property must receive stock equal to at least 80 percent of the fair market value of the property transferred.
• B) In the aggregate, the transferors of property to the corporation must collectively control the corporation immediately after the transfers.
• C) Only property transferred to a corporation is eligible for deferral.
• D) All transfers of property to a corporation must be made simultaneously to qualify for deferral.

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Definitions:

Owners' Equity

The residual interest in the assets of a company after deducting its liabilities, reflecting the capital invested by the owners plus retained earnings.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, often with dividend payment preference.

Deductible Corporate Expense

Expenses that a corporation can subtract from its gross income to reduce its taxable income, according to tax laws.

Stock Dividend

A dividend payment made by a company to its shareholders in the form of additional shares rather than a cash payout.