Match Each of the Following Items with the Appropriate Description

question 40

Multiple Choice

Match each of the following items with the appropriate description, indicating whether the item increases or decreases the parent's basis in the stock of a subsidiary.
-Dividend paid to parent out of affiliate's E & P.

• A)Increases stock basis of subsidiary
• B)Decreases stock basis of subsidiary
• C)No effect on stock basis of subsidiary

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Definitions:

Receipts

Documents acknowledging the receipt of payment for goods or services received.

Currency

The system of money in general use in a particular country.

NSF Check

A check that cannot be processed because the drawer's account does not have sufficient funds, standing for Non-Sufficient Funds.

Deposit In Transit

Funds that have been deposited by a company but not yet credited to its bank account.