Identify Which of the Following Statements Is True

question 80

Multiple Choice

Identify which of the following statements is true.

• A)Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock. Able Corporation (New York)is liquidated. This exchange is a Type F reorganization.
• B)Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment.
• C)A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes.
• D)All of the above are false.

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Definitions:

U.S. Justice Department

The federal executive department responsible for the enforcement of the law and administration of justice in the United States.

Free Market

An economic system based on supply and demand with little or no government control, where the prices of goods and services are determined freely by the open market.

Reciprocity

A social norm of responding to a positive action with another positive action, fostering mutual benefit and exchanges in relationships or transactions.