Which of the Following Statements Does Not Describe a Tax

question 94

Multiple Choice

Which of the following statements does not describe a tax consequence to shareholders in a complete liquidation?

• A)All complete liquidations are taxable to the shareholders.
• B)Complete liquidations are taxable to all individual shareholders.
• C)Complete liquidations are taxable to all corporate shareholders owning stock of the liquidated corporation representing less than 80 percent or more of voting power and value.
• D)Complete liquidations are tax-deferred to corporate shareholders owning stock of the liquidated corporation representing 80 percent or more of voting power and value.

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Definitions:

Cost Flow Assumption

Accounting methods that companies use to assign costs to inventory and cost of goods sold, such as FIFO, LIFO, and weighted average cost.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.

Average Cost Methods

The average cost method is an inventory costing method where all costs of inventory are averaged out and applied to the cost of goods sold and ending inventory.

Security Measures

Steps or protocols implemented to protect assets, information, and people from theft, damage, and unauthorized access.