Which of the Following Statements Is Correct with Respect to a Partial

question 48

Multiple Choice

Which of the following statements is correct with respect to a partial liquidation?

• A)The genuine contraction of a corporate business requirement is an objective test that taxpayers can rely upon with certainty.
• B)The distribution of proceeds from the sale of excess inventory to shareholders in exchange for part of their stock will not satisfy the not essentially equivalent to a dividend test.
• C)A stock redemption pursuant to a partial liquidation cannot be pro rata with respect to the shareholders.
• D)The termination of a business test requires that the distributing corporation actively conducted at least three trades or businesses for at least five years.
• E)None of the above.

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a product.

Income Taxes

Taxes levied by governments on the income generated by businesses and individuals within their jurisdiction.

Formal Written Statement

A document that articulates official information or positions in a structured and official manner.

Merchandise Purchases

Transactions involving the buying of goods for resale, typically recorded as inventory in a business's accounting records.