A Shareholder's Basis in Property Received in a Qualifying Stock

question 57

True/False

A shareholder's basis in property received in a qualifying stock redemption is the property's fair market value but the basis of property received in a nonqualified stock redemption is same as the corporation's basis in the property.

---

Definitions:

Cash

A form of currency that includes physical bills and coins used in transactions.

Voting Shares

Shares that give the owner the right to vote on company matters, such as electing directors, at shareholder meetings.

Fair Value

Fair value is the estimated market price of an asset or liability, reflecting the amount at which an informed transaction could take place between willing parties.

Pushdown Accounting

An accounting method where the purchase price of an acquired entity is pushed down onto the acquired entity's financial statements.