All of the Following Statements Are True About Gains Recognized

question 9

Multiple Choice

All of the following statements are true about gains recognized in a corporate reorganization except:

• A)Taxable amounts in a reorganization are classified as a dividend or capital gain.
• B)Corporate shareholders would prefer taxable amounts in a reorganization be classified as a capital gain.
• C)Individuals are taxed at the same rate for dividends and capital gains.
• D)Capital gains and dividend income can be totally eliminated in a corporate reorganization with careful tax planning.
• E)All of the above statements are true.

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Definitions:

Distribution

The process of delivering products or services from the producer to the final consumer.

Greenmail

A targeted stock repurchase where payments are made to potential bidders to eliminate unfriendly takeover attempts.

Exclusionary Self-Tender Offer

A type of tender offer in which a company offers to purchase shares from its shareholders in a way that may exclude certain holders to affect the control or composition of its shareholder base.

Poison Pill

A financial device designed to make unfriendly takeover attempts unappealing, if not impossible.