Identify which of the following statements is true.

Question

Quizplus · Accepted Answer

A tax-free spin-off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock, which is not true. Tax-free split-offs and spin-offs coming under Sec. 355 do not require the surrender of shareholder stock, which is also not true. When boot is received in a Sec. 355 spin-off transaction, the FMV of the boot will be a dividends to the extent of the shareholder's ratable share of the distributing corporation's E&P, which is true. Therefore, the only true statement is C.

Identify Which of the Following Statements Is True