Which of the Following Statements Is Correct with Respect to the §

question 57

Multiple Choice

Which of the following statements is correct with respect to the § 338 election?

• A) The subsidiary corporation makes the § 338 election.
• B) A qualified stock purchase occurs when a corporation acquires, in a taxable transaction, at least 80% of the stock (voting power and value) of another corporation within a 18-month period.
• C) The subsidiary corporation must be liquidated pursuant to the § 338 election.
• D) For purposes of the qualified stock purchase requirement, subsidiary corporation stock acquired by any member of an affiliated group that includes the parent corporation is considered acquired by the parent.
• E) None of the above.

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Definitions:

Hedge Risk

A strategy or financial instrument used to offset potential losses or gains that may be incurred by a companion investment.

Option Positions

Refers to the holding of options contracts, including call and put options, as part of an investment strategy or portfolio.

Stock Price

The cost of purchasing a share of a company, determined by the supply and demand in the stock market.

Forward Contract

A financial contract between two parties to buy or sell an asset at a predetermined future date and price.