Identify Which of the Following Statements Is False

question 107

Multiple Choice

Identify which of the following statements is false.

• A)The distribution of stock rights will be taxable if the value of the stock rights is more than 15% of the value of the underlying stock.
• B)The distribution of stock rights is generally tax free under Sec. 305.
• C)If the value of stock rights is less than 15% of the value of the underlying stock, the basis of the rights is zero unless the shareholder elects to allocate basis to the rights.
• D)The holding period for stock rights includes the holding period for the underlying stock.

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Definitions:

Island Arc

A generally curved belt of volcanic islands above a subduction zone; also used as an adjective to refer to this setting.

Linear Island Chain

A series of islands aligned in a straight or nearly straight line, often formed by volcanic activity along a tectonic plate boundary.

Mid-Ocean Ridge

An underwater mountain range, formed by plate tectonics, that stretches across the ocean floor and is associated with seismic and volcanic activity.

Plate Boundary

Zone of tectonic activity, including earthquakes, along the boundary between two lithospheric plates that are moving relative to one another.