Which One of the Following Statements About Property Distributions Is

question 139

Multiple Choice

Which one of the following statements about property distributions is false?

• A) When the basis of distributed property is greater than its fair market value, a deficit may be created in E & P.
• B) When the basis of distributed property is less than its fair market value, the distributing corporation recognizes ????.
• C) When the basis of distributed property is greater than its fair market value, the distributing corporation does not recognize loss.
• D) The amount of a distribution received by a shareholder is measured by using the property's fair market value.
• E) All of the above statements are true.

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Definitions:

Historical Cost

The original monetary value of an asset or transaction, without adjusting for inflation or market value changes.

Lessees' Balance Sheet

The financial statement that reflects the rights and obligations arising from leasing agreements, including both right-of-use assets and lease liabilities, from the perspective of the lessee.

Capital Leases

A lease that transfers substantially all risks and rewards of ownership of the asset to the lessee, effectively treated as a purchase.

Operating Leases

Leases where the lessor retains ownership of the asset, and the asset is returned after the lease term; typically involves equipment and property.