Which of the Following Events Does Not Automatically Terminate an S

question 8

Multiple Choice

Which of the following events does not automatically terminate an S corporation election?

• A)One of the corporation's 100 shareholders transfers his shares to three unrelated friends.
• B)The corporation issues a nonvoting preferred class of stock that entitles the holder to receive a greater amount on liquidation.
• C)51 percent of the shareholders consent to file a revocation.
• D)One of the corporation's 100 shareholders marries and transfers half of her shares to her husband.

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Definitions:

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Portfolio

A group of investment vehicles comprising equities, debt instruments, natural resources, actual currency, and cash-like assets, also covering collective investments such as closed-end funds and exchange-traded funds.

Geometric Average Return

The average rate of return on an investment per year, geometrically linked to account for the compounding effect of returns over time.

Arithmetic Average Return

The simple mean of a series of returns over a specific period, often used to gauge the performance of an investment.