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Question;599. #1;The Federal income tax treatment of a corporate restructuring is an extension;of allowing entities to form without taxation.;a.;True;b. False;600. #2;To ensure the desired tax treatment, parties contemplating a corporate;reorganization should apply for a Regulation from the Treasury.;a.;True;b. False;601. #3;For corporate reorganizations, the tax laws should be considered while planning;the structure of the reorganization.;a.;True;b. False;602. #4;Corporate shareholders would prefer to have a gain on a reorganization treated;as a dividend rather than as a capital gain, because of the dividends received;deduction.;a.;True;b. False;603. #5;For a corporate restructuring to qualify as a tax-free reorganization, the;transaction must have a sound business purpose.;a.;True;b. False;604. #6;Corporate reorganizations can meet the requirements to qualify as like-kind;exchanges if there is no boot involved.;a.;True;b. False;605. #7;In 1916, the Supreme Court decided that corporate reorganizations were;substantially continuations of the prior entities and thus should not be;subject to taxation.;a.;True;b. False;606. #8;In corporate reorganizations, an acquiring corporation using property other;than stock as consideration may recognize gains but not losses on the;transaction.;a.;True;b. False;607. #9;The gain recognized by a shareholder in a corporate reorganization is the;difference between the realized gain and the boot received.;a.;True;b. False;608. #10;The gains shareholders recognize as a part of a corporate reorganization may be;treated a dividend to the extent of the corporation?s earnings and profits.;a.;True;b. False;609. #11;Noncorporate shareholders may elect out of ? 368 and recognize losses when;property subject to a liability is distributed to them in a corporate;reorganization.;a.;True;b. False;610. #12;If the target corporation in a reorganization has a deficit in earnings and;profits, any gains recognized by the shareholders are treated as stock;redemptions and not as dividends.;a.;True;b. False;611. #13;Debt security holders recognize gain when the interest rate on the securities;received is greater than the interest rate on the bonds given up.;a.;True;b. False;612. #14;The treatment of corporate reorganizations is similar to like-kind exchanges.;a.;True;b. False;613. #15;In the ?Type A? merger, the acquiring corporation must assume all of the;liabilities (known and contingent) of the target, but in the ?Type A?;consolidation only those liabilities selected by the new corporation need be;transferred.;a.;True;b. False;614. #16;The ?Type A? corporate reorganization can run afoul of the continuity of;interest doctrine more easily than a ?Type C,? because with a ?Type A? the Code;does not require that the target shareholders receive common stock of the;acquiring corporation in exchange for their ownership of the target.;a.;True;b. False;615. #17;The two ?Type A? reorganizations are mergers and acquisitions.;a.;True;b. False;616. #18;In a ?Type B? reorganization, the acquiring corporation obtains control by;exchanging common and preferred stock in the same percentages as the target?s;outstanding common and preferred stock.;a.;True;b. False;617. #19;The ?Type B? reorganization requires a continuity of business interest.;Therefore, the acquiring corporation must obtain at least 40% of target;corporation?s stock through the reorganization.;a.;True;b. False;618. #20;When substantially all of the assets of the target corporation are received in;exchange for voting stock and selected liabilities, the restructuring can;qualify as a ?Type C? reorganization.;a.;True;b. False;619. #21;If the acquiring corporation purchased 25% of target stock for cash ten years;ago, the acquiring corporation cannot meet the ?Type C? reorganization;requirement that 80% of the target?s assets be acquired with stock requirement.;a.;True;b. False;620. #22;In an acquisitive ?Type D? reorganization, substantially all of the acquiring;corporation?s assets must be transferred to the target corporation for stock;amounting to at least 50 percent of the total acquiring stock.;a.;True;b. False;621. #23;In a divisive ?Type D? reorganization, the distributing corporation obtains;control of the new target by exchanging some of its assets for at least 80% of;the new target?s outstanding stock.;a.;True;b. False;622. #24;The distinguishing characteristic of a ?Type D? reorganization is the acquiring;corporation is the one transferring assets to the target corporation in;exchange for a controlling interest in the target.;a.;True;b. False;623. #25;For a capital restructuring to qualify as a ?Type E,? there must be at least a;50% change in the common stock ownership.;a.;True;b. False;624. #26;An exchange of common stock for preferred stock or bonds for preferred stock;can qualify as a ?Type E? reorganization.;a.;True;b. False;625. #27;The ?Type F? corporate reorganization includes changes in name, location, and;changing from a taxable entity to any flow-through entity.;a.;True;b. False;626. #28;For the ?Type G? reorganization, the continuity of interest test is more;stringent than for other reorganizations, because the corporation is insolvent;and the owners need to be protected.;a.;True;b. False;627. #29;When a corporation has cancellation-of-debt relief in a ?Type G?;reorganization, the corporation reduces its benefits in tax attributes such as;NOLs and business credits.;a.;True;b. False;628. #30;A tax avoidance motive is essential in establishing a sound business purpose.;a.;True;b. False;629. #31;The continuity of business enterprise requires that at least 60% of the;target?s assets are acquired with stock.;a.;True;b. False;630. #32;The continuity of interest requires that all target shareholders receive some;acquiring stock.;a.;True;b. False;631. #33;Without evidence to the contrary, the IRS views transactions occurring within;one year of a reorganization as part of the restructuring.;a.;True;b. False;632. #34;A more than 50 percentage point ownership shift will evoke the ? 382;limitation.;a.;True;b. False;633. #35;Liabilities generally are not considered boot in corporate reorganizations;except in an acquisitive ?Type D? when cash or other property is also used in;the transaction.;a.;True;b. False;634. #36;A present value analysis is beneficial when valuing tax attributes limited by;the ? 382 limitation.;a.;True;b. False;635. #37;One advantage of acquiring a corporation with losses is that after a tax-free;reorganization, the remaining corporation may combine the negative earnings and;profits (E & P) of the target corporation with positive E & P of the;acquiring corporation.;a.;True;b. False;636. #38;The ? 382 limitation on the use of capital loss carryovers is triggered when;there is a change in ownership of more than 50 percentage points for;shareholders owning at least 5% of the stock.;a.;True;b. False;637. #39;The year in which the ownership shift occurs for a corporation, the NOL;carryforward is limited not only by the ? 382 annual limitation, but also by;the percentage of the year remaining.;a.;True;b. False;638. #40;The sound business purpose doctrine and ? 269 have the same purpose of;disallowing restructurings that are primarily for tax avoidance motives.;a.;True;b. False

 

Paper#59223 | Written in 18-Jul-2015

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