Identify Which of the Following Statements Is False

question 82

Multiple Choice

Identify which of the following statements is false.

• A)The rules for the recognition of a gain or loss by a corporation that distributes property in redemption of its stock are the same as the rules for property distributions that are not in redemption of stock.
• B)Generally, little or no gain is recognized by the redeeming shareholder in a qualified Sec. 303 redemption.
• C)When a stock redemption is considered a sale of stock by the shareholder, the E&P of the redeeming corporation is reduced by the FMV of the property used to redeem the stock.
• D)Under Sec. 311, a corporation does not recognize a loss when it distributes property that has declined in value.

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Definitions:

Social Security

A government program that provides financial assistance to people with inadequate or no income, such as the elderly, disabled, and survivors.

Medicare Tax

A federal tax that funds Medicare, health insurance for individuals over 65; deducted from employees' paychecks.

Payroll Tax Expense

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes.

Social Security Tax

A tax imposed on both employers and employees to fund the Social Security program, which provides retirement, disability, and survivorship benefits.