Identify Which of the Following Statements Is True

question 85

Multiple Choice

Identify which of the following statements is true.

• A)The FMV of an obligation is used to determine the E&P reduction when a corporation distributes the obligation to its shareholders.
• B)When appreciated property is distributed to shareholders, E&P must be increased by any gain (net of taxes)recognized due to the property distribution.
• C)When appreciated property is distributed in a nonliquidating distribution, the net effect on the distributing corporation's E&P is that it is reduced by the net of the FMV of the property distributed minus the gain (net of federal income taxes)recognized due to the property distribution.
• D)Only B and C above are true.

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Definitions:

Adverse Legislation

Legislation that is considered unfavorable or detrimental to the interests of a specific group or the public.

First Amendment

An amendment to the U.S. Constitution that prohibits the making of any law infringing on the freedom of speech, the press, religion, assembly, and petition.

Lobbying

The act of attempting to influence decisions made by officials in the government, most often legislators, by individuals or more commonly by lobby groups.

Political Action Committee (PAC)

An organization that collects political donations from its members and uses those funds to support or oppose candidates, legislation, or political initiatives.