Ward Planter Exclusively Grew Soybeans from 2011 to 2013 and Participated

question 147

Multiple Choice

Ward Planter exclusively grew soybeans from 2011 to 2013 and participated in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest was less than the preharvest "loan price," Planter could

• A) sell his crop in the market and receive the difference between the crop price and loan price as a direct payment from the federal government.
• B) take a "crop credit" based on the difference between the crop price and the loan price and use the credit to reduce federal income taxes owed.
• C) receive an "emergency loan" that could be paid back over the following five years.
• D) forfeit the harvest to the lender and be free of the loan, thus receiving a subsidy because the proceeds from the loan exceeded the revenues from the sale of the crop in the market.

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Definitions:

Capital Stock

The total amount of shares that a corporation is authorized to issue to shareholders, representing the primary source of equity financing for the company.

Cumulative Preferred Stock

A type of preferred stock that entitles the shareholder to receive dividends that were missed in the past before any dividends are paid to common stock shareholders.

Capital Stock

The total amount of shares that a corporation is authorized to issue as stated in its articles of incorporation.

Dividend

A portion of a company's earnings distributed to its shareholders.