Identify Which of the Following Statements Is False

question 54

Multiple Choice

Identify which of the following statements is false.

• A)An individual taxpayer, who is assessed an additional payment of money based on stock ownership in a corporation whose stock is redeemed in a complete liquidation, may recognize a capital loss to the extent of the additional assessment.
• B)The open transaction doctrine defers the shareholder's gain or loss from a liquidation until the assets can be valued by sale or collection.
• C)The open transaction doctrine as applied to complete corporate liquidations refers to the numerous planning alternatives available when liquidating a corporation.
• D)The IRS asserts that the open transaction doctrine should be used only in extraordinary circumstances.

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Definitions:

Market Value Ratios

Financial metrics used to evaluate the attractiveness of an investment by comparing its share price to various per-share financial metrics.

Liquidity Ratios

Financial metrics used to determine a company's ability to meet its short-term debt obligations.

Debt Management Ratios

Financial ratios that are used to evaluate a company's ability to manage its long-term and short-term debt obligations.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers, reflecting the efficiency of its credit and collection policies.