Section 1248 Applies to Which of the Following Transactions

question 40

Multiple Choice

Section 1248 applies to which of the following transactions?

• A)Sale or exchange of stock in a U.S. corporation by a foreign person.
• B)Sale or exchange of stock in a U.S. corporation by a U.S. person.
• C)Sale or exchange of stock in a controlled foreign corporation by its 100% U.S. shareholder.
• D)Sale or exchange of stock in a foreign corporation that has never been a controlled foreign corporation by a U.S. person.
• E)None of the above.

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Definitions:

Nominal rate

An interest rate or return quoted on an investment or loan, not adjusted for inflation or other factors.

Effective rate

The total compounded interest rate, expressed annually, that represents the actual financial cost of a loan or investment.

Compounded quarterly

Interest is recalculated every three months based on both the initial principal and previously earned interest, leading to exponential growth of an investment or debt.

Principal amount

The principal amount refers to the initial sum of money borrowed in a loan or invested, excluding any interest or additional fees.