Identify Which of the Following Statements Is True

question 4

Multiple Choice

Identify which of the following statements is true.

• A)A corporation accumulates earnings to fund the redemption of a shareholder's stock following her death so as to provide her estate with liquidity to pay death taxes. Such an accumulation of earnings is a reasonable business need.
• B)A corporation accumulates earnings to fund a buy-sell agreement. Such an accumulation of earnings is a reasonable business need.
• C)A corporation's net capital gain (minus any federal income taxes paid with respect to such gain)increases the tax base for the accumulated earnings tax.
• D)All of the above are false.

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Definitions:

Realistic Expectations

Anticipations or beliefs about future events or outcomes that are based on practical and logical premises, rather than hopes or desires.

Biological Family

individuals who are genetically related to one another, such as parents, siblings, and extended family.

Americans

People originating from or holding citizenship in the United States.

Remarry

The act of entering into a marriage after one or more previous marriages have ended in divorce or death of a spouse.