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:

Appreciation

A term used in finance and economics to describe the increase in value of an asset over time.

GPS

Global Positioning System, a satellite-based navigation system that provides location and time information in all weather conditions.

Satellite Global Positioning System

A network of satellites that provide navigation data to military and civilian users around the globe, enabling users to determine their exact location.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, representing wear and tear, or obsoleteness.