Identify Which of the Following Statements Is True

question 75

Multiple Choice

Identify which of the following statements is true.

• A)Generally in a stock redemption, if the shareholder's ownership percentage is substantially reduced, the redemption is treated as a sale.
• B)The family attribution rules of Sec. 318 are as inclusive as the family attribution rules of Sec. 267.
• C)A 10% shareholder of a corporation is considered to own 10% of any stock that is owned by the corporation under the Sec. 318 attribution rules.
• D)All of the above are false.

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Definitions:

Cash Distribution

The payment of cash to shareholders or partners as part of the profits or surplus.

Self-employment Income

Income derived from running a business as a sole proprietor, independent contractor, or freelancer, as opposed to earning a salary or wages from an employer.

Section 179 Expense

A section of the IRS tax code allowing businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.

Separately Stated

Items on a tax return or financial statement that are listed individually to ensure proper treatment under tax laws or accounting rules.