Identify Which of the Following Statements Is True

question 78

Multiple Choice

Identify which of the following statements is true.

• A)A tax-free spin-off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock.
• B)Tax-free split-offs and spin-offs coming under Sec. 355 require the surrender of shareholder stock.
• C)When boot is received in a Sec. 355 spin-off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P.
• D)All of the above are false.

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Definitions:

Materially

In a significant or substantial manner, especially in a way that affects a contract or legal decision.

Bailment

A legal relationship where physical possession of personal property is transferred from one person to another with the understanding that the property will be returned.

Sale

A contract in which ownership of goods is transferred by the seller to the buyer for a price.

Title

Legal ownership of property, especially real estate or automobiles.