Which Statement Is Incorrect

question 103

Multiple Choice

Which statement is incorrect?

• A)S corporation status allows shareholders to realize tax benefits from corporate losses immediately.
• B)Shareholder-level tax on corporate profits can be eliminated by a step-up in the basis of the stock upon a shareholder's death.
• C)Fewer than 50% of all U.S.corporations make the S election.
• D)An S corporation resembles an LLC for Federal income tax purposes.
• E)None of the above.

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Definitions:

Market Value

The current value of an asset or company based on the price that a buyer is willing to pay in the market.

Liquidating Dividend

A type of dividend payment made by a corporation using its capital base rather than earnings, typically during partial or full liquidation.

Dividend Policy

A strategy a company uses to decide how much it will pay out to shareholders in dividends.

Alternate Dividend Policy

A strategy employed by a company to distribute earnings to shareholders through dividends that may vary in amount and frequency depending on the company's earnings, investment opportunities, and capital needs.