A Stock Redemption Is Always Treated as a Sale or Exchange

question 43

True/False

A stock redemption is always treated as a sale or exchange for tax purposes.

---

Definitions:

Cumulative Surplus

The total amount of net income retained by a company over time, which has not been distributed to shareholders as dividends.

Minimum Cash Balance

The least amount of cash a company needs on hand to meet its immediate operational expenses and financial obligations.

Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Restrictive Policy

A restrictive policy refers to a set of rules or regulations designed to limit or control certain activities or behaviors, often implemented to ensure safety, security, or compliance with legal standards.