A Subsidiary Is Liquidated Pursuant to § 332

question 8

True/False

A subsidiary is liquidated pursuant to § 332. The parent has held 100% of the stock in the subsidiary for the past ten years. The subsidiary has E & P of $600,000 at the time of liquidation. The subsidiary's E & P disappears as a result of the liquidation.

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Definitions:

Corporate Law

A body of law governing the rights, relations, and conduct of persons, companies, organizations, and businesses.

Partnerships

An authorized business setup involving two or more persons, sharing both the responsibilities of management and the financial gains.

Corporate Finance

The area of finance dealing with the sources of funding and the capital structure of corporations, and the actions that managers take to increase the value of the firm to the shareholders.

Ratified

Ratification refers to the formal approval or confirmation of an agreement or treaty, often after the act has been signed or provisionally applied.