Identify Which of the Following Statements Is True

question 11

Multiple Choice

Identify which of the following statements is true.

• A) A parent corporation cannot liquidate a subsidiary corporation (having but a single class of stock) and avoid recognizing its realized gain unless the parent corporation owns at least 80% of the subsidiary's stock.
• B) The provisions permitting a tax- free liquidation of a subsidiary corporation apply to both corporate and noncorporate shareholders of the subsidiary.
• C) The liquidation of a subsidiary corporation must be completed within one tax year to receive nonrecognition treatment.
• D) All of the above are false.

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Definitions:

Mechanism Design

A field in economics and game theory that seeks to create economic mechanisms or incentives to achieve desired objectives, often optimizing resource allocation.

Behavioral Economics

A branch of economics that uses the insights of psychology and economics to investigate decision making.

Lack of Information

A situation where individuals or entities do not have sufficient knowledge to make informed decisions.

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