Which of the Following Statements Is Not True About Redemptions

question 63

Multiple Choice

Which of the following statements is not true about redemptions?

• A)Redemptions of Sec. 306 stock are generally treated as dividends to the shareholder.
• B)A sale of stock from one controlled corporation to another controlled corporation is treated as a redemption.
• C)Redemptions to pay death taxes are treated as dividends to the shareholder.
• D)A distribution in redemption of stock is generally a dividend.

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Definitions:

Manufacturing Margin

The difference between the sales revenue generated by manufactured goods and the cost of producing those goods, indicating profitability.

Variable Costing

A pricing technique that incorporates solely the variable costs of production—such as raw materials, direct labor, and variable overhead expenses—into the per-unit cost of products.

Variable Overhead

Costs that change with the level of production or service activities.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.