Which of the Following Statements Best Describes the Continuity of Interest

question 39

Multiple Choice

Which of the following statements best describes the continuity of interest principle as it applies to a tax-deferred acquisition?

• A)Continuity of interest requires each shareholder to receive at least 40 percent of the consideration received in equity of the acquirer.
• B)Continuity of interest requires shareholders in the aggregate to receive at least 40 percent of the consideration received in equity of the acquirer.
• C)Continuity of interest requires each shareholder to receive at least 80 percent of the consideration received in equity of the acquirer.
• D)Continuity of interest requires shareholders in the aggregate to receive at least 80 percent of the consideration received in equity of the acquirer.

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Definitions:

Scrotum

A pouch of skin containing the testicles and part of the spermatic cord, providing a cooler environment essential for sperm production.

Vasectomy

A surgical procedure for male sterilization or permanent contraception, involving the cutting and sealing of part of each vas deferens.

Sperm

Male reproductive cells capable of fertilizing a female's egg.

Urethra

The tube that conveys urine from the bladder to the outside of the body in both sexes, and also transports semen in the male reproductive system.