Grant Corporation Transfers Highly Appreciated Stock to Subsidiary Corporation in Exchange

question 16

Multiple Choice

Grant Corporation transfers highly appreciated stock to Subsidiary Corporation in exchange for all of its stock. The Subsidiary Corporation stock is distributed to its sole shareholder, Peter. Three weeks after the distribution of the Subsidiary stock, Subsidiary Corporation liquidates. Peter then sells the appreciated stock that he received in the liquidation. This series of transactions

• A)does not meet the statutory definition of a divisive Type D reorganization.
• B)fails the business purpose requirement.
• C)results in a capital gain to Peter.
• D)None of the above is correct.

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Definitions:

Defense Mechanisms

Methods the unconscious mind uses to modify, reject, or alter reality in an effort to protect oneself from experiencing distress and inappropriate urges.

Moral Development

The process through which individuals develop proper attitudes and behaviors towards other people in society, based on social and cultural norms, laws, and personal beliefs.

B. F. Skinner

An American psychologist and behaviorist best known for his work in developing the theory of operant conditioning.

A. Maslow

Refers to Abraham Maslow, an American psychologist known for creating Maslow's hierarchy of needs, a theory in psychology regarding human motivation.