One Consequence of a Property Distribution by a Corporation to a Shareholder

question 80

Multiple Choice

One consequence of a property distribution by a corporation to a shareholder is that

• A) the shareholder's basis in the distributed property is the same as the distributing corporation's basis.
• B) the amount of the distribution is increased by any liability assumed by the shareholder.
• C) any liabilities assumed by the shareholder do not reduce the shareholder's basis.
• D) the holding period of the distributed property includes the holding period of the distributing corporation.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, based on a set formula prior to the start of a period.

Manufacturing Overhead

Indirect costs related to the production process, such as equipment maintenance and factory rent.

Labor-Hours

A measure of the work effort in hours contributed by labor to produce a unit or complete a process.

Variable Manufacturing Overhead

Costs in the manufacturing process that vary with production volume, including costs related to supplies and utilities directly involved in production.