Identify Which of the Following Statements Is True

question 42

Multiple Choice

Identify which of the following statements is true.

• A) A shareholder who receives a deficiency dividend must report the dividend as gross income for the tax year that includes the last day of the distributing corporation's tax year on which it was a PHC.
• B) A personal holding company's payment of a deficiency dividend eliminates its need to pay the personal holding company tax as well as any interest and underpayment penalties on the tax deficiency.
• C) A deficiency dividend is included in the shareholder's gross income for his/her tax year that includes the last day of the tax year in which the personal holding company claims a dividends- paid deduction.
• D) All of the above are false.

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Definitions:

Accounts Receivable

Funds that customers owe to a business for products or services that have been provided but not yet compensated for.

Other Receivable

Accounts receivable that do not fit standard trade transactions, sometimes including loans to employees or advances to suppliers.

Notes Receivable

Claims against others for money, goods, or services evidenced by notes, promises to pay, or receipts.

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.