Identify Which of the Following Statements Is True

question 60

Multiple Choice

Identify which of the following statements is true.

• A)An S corporation should have a buy-sell agreement to guard itself against an ill-advised sale of its stock.
• B)The terms "small business corporation" and "S corporation" are synonymous.
• C)A regular corporation has common and preferred stock outstanding on January 1. On January 2, the preferred stock is canceled in a recapitalization, leaving only common stock outstanding. The corporation can make an S election for this tax year.
• D)All of the above are false.

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Definitions:

Bailee

A person or entity entrusted with custody of property belonging to another.

Negligent

Failing to take proper care in doing something, leading to damage or harm to someone else.

Due Care

Due care refers to the effort made by an individual or entity to avoid harm to another party, often evaluated as the care a reasonable person would exercise under similar circumstances.

Ordinary Bailments

Agreements where personal property is transferred from one party to another, with the intention of returning the property after a certain period or purpose.