Identify Which of the Following Statements Is True

question 31

Multiple Choice

Identify which of the following statements is true.

• A)The method of accounting used by shareholders involved in a complete liquidation is relevant when determining the year in which the shareholder's gain or loss should be reported.
• B)An accrual method of accounting taxpayer recognizes his/her realized gain on a corporate liquidation when there has been actual or constructive receipt of the liquidating distribution(s).
• C)If a shareholder assumes or acquires liabilities of the liquidating corporation, the amount of these liabilities does not reduce the amount realized by the shareholder.
• D)All of the above are false.

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Definitions:

Reply

A response given to a question or statement, often used in both verbal and written communication.

Original Jurisdiction

The authority of a court to hear a case for the first time as opposed to reviewing a lower court's decision.

Arbitrator

A neutral third party who resolves disputes outside the court, whose decision the disputing parties agree to abide by.

Compromise Decision

A resolution or agreement reached by each side making concessions, especially in a legal or business context, to settle a dispute or disagreement.