Identify Which of the Following Statements Is False

question 59

Multiple Choice

Identify which of the following statements is false.

• A) The holding period for stock rights includes the holding period for the underlying stock.
• B) The distribution of stock rights is generally tax free under Sec. 305.
• C) The distribution of stock rights will be taxable if the value of the stock rights is more than 15% of the value of the underlying stock.
• D) If the value of stock rights is less than 15% of the value of the underlying stock, the basis of the rights is zero unless the shareholder elects to allocate basis to the rights.

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Definitions:

Treasury Bonds

Long-term government securities issued with a fixed interest rate and maturity of generally more than 10 years.

Brokerage Commission

The charge imposed by a broker for conducting trades or offering specific services.

Interest Revenue

Income earned from lending funds or depositing funds in interest-bearing accounts, often reported as part of non-operating income.

Accrued Interest

Interest that has been earned but not yet received or recorded.