Identify Which of the Following Statements Is True

question 81

Multiple Choice

Identify which of the following statements is true.

• A)The target corporation in a tax-free reorganization generally recognizes no gain or loss when boot property is received in exchange for assets because such property is usually distributed to its shareholders and creditors when the target corporation is liquidated.
• B)In tax-free reorganizations, one transaction cannot qualify for more than one type of tax-free reorganization.
• C)The Sec. 1245 recapture rules override the nonrecognition of gain or loss rules for an asset-for-stock tax-free reorganization.
• D)All of the above are false.

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Definitions:

Working Capital

A financial metric representing the difference between a company's current assets and current liabilities, indicating short-term liquidity.

Capital Budgeting

Capital budgeting is the process a business undertakes to evaluate potential major investments or expenditures to achieve long-term benefits.

Straight-Line Depreciation

A depreciation method where an asset's cost is evenly distributed over its expected lifespan.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period.