Match the Following Items with the Statements That Follow

question 131

Multiple Choice

Match the following items with the statements that follow. Terms may be used more than once.
-Jones Corporation is insolvent and under state law protection from its creditors. Its assets are transferred to Smith Corporation in exchange for all of its stock. The stock is distributed to the creditors of Jones, and the shareholders receive only stock valued at 10% of their stock.

• A)Boot
• B)Business credits
• C)Capital gain
• D)Continuity of business enterprise
• E)Continuity of interest
• F)Dividend
• G)Discount rate
• H)Earnings and profits
• I)Federal long-term tax-exempt rate
• J)Liability assumption
• K)Ordinary gain
• L)Ownership change
• M)Section 382 limitation
• N)Sound business purpose
• O)Step transaction

Acknowledge the role of board of directors and bondholders' rights in bond-related decisions.

Identify the implications of issuing bonds at a premium or discount on the carrying value of bonds.

Understand the concept and implications of stock dividends in relation to bond interest payments.

Understand strategies for reducing income tax liability for small businesses.

---

Definitions:

Hydrogen Ions

Positively charged ions (H+) that are simply protons and play essential roles in chemical reactions, particularly in determining the acidity or pH of solutions.

Bicarbonate Ions

An ion consisting of hydrogen, carbon, and three oxygen atoms, playing a crucial role in maintaining pH balance in the blood.

Acidity

A chemical property that quantifies the amount of acid in a solution, often measured by pH levels.