As Can Be Learned from the Chapter, a Redemption Agreement

question 31

Multiple Choice

As can be learned from the chapter, a redemption agreement is the covenant, in which:

• A) The business owns insurance policies on the owners and is obligated to use the proceeds to purchase each stockholder's equity upon his or her death.
• B) Each owner is required to take out insurance on the others and to buy a proportional amount of the deceased's equity.
• C) Business assets, such as inventory or marketable securities, equal to the value of owner's share of the equity in the company will be transferred to relatives upon his or her death.
• D) Internal Revenue Service allows installment tax payments to be received within 2 years after an owner's death.
• E) None of the above.