Individual shareholders would prefer to have a gain on a corporate reorganization treated as a capital gain rather than as a dividend, because they can reduce the amount taxable by their basis in the stock involved.

Question

Quizplus · Accepted Answer

Capital gains are typically taxed at a lower rate than dividends and allow shareholders to reduce the taxable amount by their basis in the stock, potentially resulting in a lower tax liability.

Individual Shareholders Would Prefer to Have a Gain on a Corporate