Which of the Following Statements Is True Concerning All Types

question 49

Multiple Choice

Which of the following statements is true concerning all types of tax-free corporate reorganizations?

• A)Assets are transferred from one corporation to another.
• B)Stock is exchanged with shareholders.
• C)Liabilities that are assumed when cash is also used as consideration will be treated as boot.
• D)Corporations and shareholders involved in the reorganization may recognize gains but not losses.
• E)None of the above statements is true.

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Definitions:

Consideration

The value (such as money, a service, or a promise) that is given by one party to another in exchange for something else, forming a necessary component of a legally binding contract.

Premium

The amount paid for an insurance policy.

Peril

A specific risk or cause of loss covered by an insurance policy, such as fire, theft, or natural disaster.

Beneficiary

An individual or entity entitled to benefits or proceeds from a will, trust, insurance policy, or other contract.