Identify Which of the Following Statements Is True

question 80

Multiple Choice

Identify which of the following statements is true.

• A)Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock. Able Corporation (New York)is liquidated. This exchange is a Type F reorganization.
• B)Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment.
• C)A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes.
• D)All of the above are false.

---

Definitions:

Patent

A legal right granted by a government to an inventor, giving exclusive rights to use, make, and sell an invention for a certain period of time.

Inelastic Demand

A situation in which the demand for a product does not increase or decrease significantly when the price changes.

Monopoly Power

Monopoly power denotes the extent to which a firm can set the price for its product above marginal cost due to the lack of competition in its market.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual market price they receive.