Identify Which of the Following Statements Is True

question 1

Multiple Choice

Identify which of the following statements is true.

• A) The basis of property acquired in a reorganization is its FMV.
• B) The acquisition of liabilities by an acquiring corporation will trigger a gain.
• C) A target corporation will recognize a gain when it distributes stock to its shareholders.
• D) Depreciation recapture rules do not override the nonrecognition of gain or loss rules.

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Definitions:

Retain Earnings

Profits that a company keeps or reinvests in itself instead of distributing to its shareholders as dividends.

Rate Of Return

The enhancement or decline in financial value of an investment over a certain course, characterized as a percentage of the investment's initial outlay.

Annual Dividend

The total dividend payment a shareholder receives from a stock or investment in a year, expressed on a per-share basis.

Market Value

The instant price at which transactions for a service or asset can be made.