Which of the Following Statements Is TRUE Regarding the Disposal

question 4

Multiple Choice

Which of the following statements is TRUE regarding the disposal of shares by a shareholder?

• A)When a shareholder sells shares to other shareholders, the corporation's capital base increases.
• B)The sale of shares to other shareholders is known as a 'buy-back'.
• C)The sale of shares back to the corporate treasury is not an allowable transaction.
• D)The sale of shares to the corporate treasury may result in a deemed dividend and a capital gain or loss to the shareholder.

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Definitions:

Constructively Presented

A concept where something is deemed to be presented or made available through implication or through the circumstances, rather than by direct presentation.

Donative Intent

The intention to give a gift expressed by a donor, a key requirement in the law of gifts to demonstrate that a transfer is indeed intended as a gift.

Legal Action

Legal action is the process of seeking resolution or enforcement of rights through the judicial system.

Liability

A legal responsibility or obligation, often financial in nature, that an individual or entity is bound to settle.