Grant Corporation Transfers Highly Appreciated Stock to Subsidiary Corporation in Exchange

question 16

Multiple Choice

Grant Corporation transfers highly appreciated stock to Subsidiary Corporation in exchange for all of its stock. The Subsidiary Corporation stock is distributed to its sole shareholder, Peter. Three weeks after the distribution of the Subsidiary stock, Subsidiary Corporation liquidates. Peter then sells the appreciated stock that he received in the liquidation. This series of transactions

• A)does not meet the statutory definition of a divisive Type D reorganization.
• B)fails the business purpose requirement.
• C)results in a capital gain to Peter.
• D)None of the above is correct.

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Definitions:

Middle-level Managers

Managers who operate between the senior management and the operational levels of an organization, responsible for executing organizational policies and strategies at the departmental level.

Upper-level Managers

Refer to executives and senior managers who are responsible for high-level decision-making and setting the overall direction of an organization.

Emotional Intelligence

The ability to recognize, understand, and manage our own emotions and those of others, facilitating enhanced communication and interpersonal effectiveness.

Affective and Cognitive

Pertaining to the emotions and mental processes involved in how people perceive and react to the world around them.