Identify Which of the Following Statements Is True

question 68

Multiple Choice

Identify which of the following statements is true.

• A)The control requirement for Sec. 355 differs from the control requirement under Sec. 351.
• B)Aspect Corporation transfers assets to newly created Expert Corporation in exchange for all of Expert's stock. Shortly after the transfer, Aspect exchanges one-half of the Expert stock that it receives for land. The individuals transferring the land have never been Aspect shareholders. This transaction qualifies as a divisive Type D reorganization and is tax-free to all parties.
• C)Common stock can be exchanged for preferred stock in the same corporation as a Type E reorganization.
• D)All of the above are false.

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Definitions:

Principal-Agent Problem

A dilemma in economics and organizational theory where one party (the agent) is expected to act in the best interest of another (the principal) but may have personal interests that conflict.

Corporate Managers

Individuals at high levels within a corporation who are responsible for making strategic decisions and ensuring the company's objectives are met.

Corporate Owners

Individuals or entities that legally possess shares of stock in a corporation, granting them ownership stakes in the company.

Individual Accountability

The principle that each person is responsible for their own actions and may be required to explain them when necessary.