Identify Which of the Following Statements Is False

question 107

Multiple Choice

Identify which of the following statements is false.

• A)The distribution of stock rights will be taxable if the value of the stock rights is more than 15% of the value of the underlying stock.
• B)The distribution of stock rights is generally tax free under Sec. 305.
• C)If the value of stock rights is less than 15% of the value of the underlying stock, the basis of the rights is zero unless the shareholder elects to allocate basis to the rights.
• D)The holding period for stock rights includes the holding period for the underlying stock.

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Definitions:

Lawsuit

A legal case brought to court by one party against another seeking a resolution to a dispute.

Defendant

The party against whom a lawsuit is filed in a court of law.

Plaintiff

The party who initiates a lawsuit by filing a complaint against the defendant in a court of law.

Mediation

A form of alternative dispute resolution where a neutral third party helps disputing parties reach a mutually agreeable solution.