Identify Which of the Following Statements Is True

question 91

Multiple Choice

Identify which of the following statements is true.

• A) The assignment of income doctrine does not apply if the transferor in a Sec. 351 exchange in which no gain is otherwise recognized transfers when a sole proprietor transfers substantially all the assets and liabilities of the transferor's trade or business to a controlled corporation.
• B) The assignment of income doctrine is a legislative requirement that income be taxed to the person who earns it.
• C) The assignment of income doctrine requires a cash method of accounting for a transferor/shareholder to recognize income when accounts receivable are transferred by the shareholder to the corporation in a Sec. 351 exchange in which no gain is otherwise recognized.
• D) All of the above are false.

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Definitions:

Conformity

A change in behavior due to explicit or implicit social pressure.

Fundamental Attribution Error

A cognitive bias that causes people to overestimate the influence of personality or dispositional factors on an individual's behavior while underestimating the influence of situational factors.

Dispositional Causes

Factors related to an individual's personality or internal characteristics that are thought to cause their behavior.

Situational Causes

Factors or circumstances outside the individual that are attributed to affecting behavior.