Which of the Following Types of Transactions Qualify for Nonrecognition

question 29

Multiple Choice

Which of the following types of transactions qualify for nonrecognition treatment?

• A)Exchange by a shareholder of stock in Chevron for stock in Shell.
• B)Investment of the proceeds from the sale of the stock of a publicly traded company in the common stock of a specialized small business investment company (SSBIC) within 60 days of the sale.
• C)Investment of proceeds from the sale of qualified small business stock in another qualified small business stock within 60 days of the sale.
• D)Only b.and c.
• E)a., b., and c.

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Definitions:

Operating Activity

Transactions and events related to the primary operations of a business, such as selling products or services.

Revenue Activity

Activities undertaken by a business that result in the earning of income, typically from the sale of goods or provision of services.

Cash Investments

Financial assets such as stocks, bonds, or real estate purchased with the expectation of generating a return on investment.

Statement of Cash Flows

A financial statement detailing the impact of alterations in balance sheet accounts and income on cash and cash equivalents, segmented into operating, investing, and financing activities.