Blast Corporation Manufactures Purses and Make-Up Kits

question 72

Multiple Choice

Blast Corporation manufactures purses and make-up kits. The corporation decides to quit manufacturing purses and distributes the assets associated with this division to its shareholders. The distribution of the these assets will be treated as a partial liquidation if

• A)the corporation so elects.
• B)the corporation discontinues the line of business and the transaction is "essentially equivalent to a dividend."
• C)the distribution is made within 24 months of the adoption of a plan of liquidation and the transaction is "not essentially equivalent to a dividend."
• D)the distribution is "not essentially equivalent to a dividend" and is made within the year a plan of liquidation is adopted or within the succeeding year.

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Definitions:

Pressure Balance

The equilibrium of forces causing fluid particles to remain stationary, critical in hydraulic and pneumatic systems for stable performance.

Wheel Cylinders

Hydraulic cylinders in a drum brake system, responsible for applying force to the brake shoes when the brake pedal is pressed.

Hydraulic System

A technology in which fluid is used to move energy from one location to another, often used in machinery to perform work.

Double-Wall Steel

A construction method using two layers of steel to provide added strength, insulation, or protection against leaks or external damage.