Identify which of the following statements is true.
A)To have a bona fide partial liquidation, a firm must continue to conduct a qualified trade or business, which it had conducted for a period of more than three years prior to the redemption.
B)To qualify as a partial liquidation, a distribution must result in a bona fide contraction of the corporate business at the corporate level.
C)A partial liquidation of a corporation must be pro rata.
D)All of the above are false.

Question

Quizplus · Accepted Answer

To qualify as a partial liquidation, a distribution must result in a bona fide contraction of the corporate business at the corporate level is true.

A is false because to have a bona fide partial liquidation, a firm must continue to conduct a qualified trade or business, which it had conducted for a period of more than five years prior to the redemption.

C is false because a partial liquidation of a corporation may be pro rata or non-pro rata.

Identify Which of the Following Statements Is True