If a Shareholder Transfers Liabilities to a Corporation in a Sec

question 124

True/False

If a shareholder transfers liabilities to a corporation in a Sec. 351 transfer, there is no effect on the corporation's stock basis due to the corporation's assumption of liabilities.

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Definitions:

Earnings Decrease

A reduction in the income a company generates from its activities, excluding extraordinary and non-recurring items.

Risk

The potential for experiencing losses or less-than-expected returns, inherent in investments and business activities.

Common-sized Financial Statements

Financial statements that present all items in percentage terms. The balance sheet items are presented as a percentage of assets, and income statement items are presented as a percentage of sales.

Industry Averages

Statistical benchmarks that represent the standard or average performance in a particular industry, useful for comparison and analysis.