Identify Which of the Following Statements Is False

question 45

Multiple Choice

Identify which of the following statements is false.

• A) The parent corporation takes a basis in property received when liquidating a subsidiary corporation in a Sec. 332 liquidation equal to its basis to the subsidiary corporation.
• B) Property received by a minority shareholder takes a basis equal to its fair market value.
• C) Section 332 is applicable to both the parent corporation and the minority shareholders if they exist.
• D) Minority shareholders involved in a Sec. 332 subsidiary liquidation must recognize a gain or loss under the Sec. 331 general liquidation rules.

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Definitions:

Accounting

The systematic process of recording, measuring, and communicating financial information to help in decision-making.

Supplies Used

The amount of supplies consumed during a specific period, which may be accounted for as an expense.

Balance Sheet

A ledger entry detailing a business’s resources, debts, and equity ownership at a fixed point in time.

Adjustment

A modification made to an account or financial statement to correct an error or reflect new information.