Identify Which of the Following Statements Is True

question 41

Multiple Choice

Identify which of the following statements is true.

• A) When boot is received in a Sec. 355 spin- off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P.
• B) A tax- free spin- off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock.
• C) Tax- free split- offs and spin- offs coming under Sec. 355 require the surrender of shareholder stock.
• D) All of the above are false.

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Definitions:

Union Dues

Fees paid by workers to labor unions for membership and benefits.

Medical Insurance

A policy that covers the cost of an insured individual's medical and surgical expenses, either directly paid to the healthcare provider or reimbursed to the insured.

Federal Income Taxes

Federal government-imposed charges on the yearly earnings of individuals, corporations, trusts, and other legal entities.

Net Income

What a business earns in profit once every cost and tax is deducted from its revenue.