WGU D557 Section 3 | Questions and Answers | Latest
2025/26 Update | 100% Correct.
Correct
Incorrect
WGU D557 Section 3
67 Correct terms
Questions and answers
corporation.
How do corporate shareholders
prefer stock redemptions to be
treated?
, What are some additions made to How are corporate assets
taxable income when computing transferred in a reorganization
E&P? treated for tax purposes?
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2 of 67
Definition
Accounting and legal costs for the plan of liquidation and costs of
revoking the corporate charter.
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What are the requirements for a What are tax-free corporate
dividend to be qualified? reorganizations?
What are some examples of
When does gain recognition occur in
deductible liquidation
a tax-free reorganization?
expenses?
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, 3 of 67
Term
How does Section 179 expense affect E&P?
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It measures the dividend-paying
It must be deducted over five
capacity of a corporation and
years, with 80% of the expense
represents the maximum amount of
added back to taxable income
dividend income shareholders must
in the year elected.
recognize.
E&P is reduced by the money It terminates the corporation's
distributed or the greater of FMV or existence and ownership interest,
adjusted basis of the property minus producing sale or exchange
liability. treatment for tax purposes.
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4 of 67
Term
What are antistuffing rules designed to prevent?
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, They affect E&P only to the extent Accounting and legal costs for the
they are recognized for tax purposes. plan of liquidation and costs of
revoking the corporate charter.
They prevent duplication of
They retain their basis, with
losses by disallowing certain
adjustments for any gain recognized
losses on liquidation
by the target corporation.
distributions.
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5 of 67
Definition
It requires the corporation to step down the basis of the property to
eliminate built-in losses.
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How does a complete corporate What does E&P represent for
liquidation affect shareholders? shareholders?
What does Section 362(e)(2)
What does Section 312 provide require regarding built-in loss
regarding E&P? property acquired in a 351
transaction?
Don't know?
6 of 67
2025/26 Update | 100% Correct.
Correct
Incorrect
WGU D557 Section 3
67 Correct terms
Questions and answers
corporation.
How do corporate shareholders
prefer stock redemptions to be
treated?
, What are some additions made to How are corporate assets
taxable income when computing transferred in a reorganization
E&P? treated for tax purposes?
Don't know?
2 of 67
Definition
Accounting and legal costs for the plan of liquidation and costs of
revoking the corporate charter.
Give this one a try later!
What are the requirements for a What are tax-free corporate
dividend to be qualified? reorganizations?
What are some examples of
When does gain recognition occur in
deductible liquidation
a tax-free reorganization?
expenses?
Don't know?
, 3 of 67
Term
How does Section 179 expense affect E&P?
Give this one a try later!
It measures the dividend-paying
It must be deducted over five
capacity of a corporation and
years, with 80% of the expense
represents the maximum amount of
added back to taxable income
dividend income shareholders must
in the year elected.
recognize.
E&P is reduced by the money It terminates the corporation's
distributed or the greater of FMV or existence and ownership interest,
adjusted basis of the property minus producing sale or exchange
liability. treatment for tax purposes.
Don't know?
4 of 67
Term
What are antistuffing rules designed to prevent?
Give this one a try later!
, They affect E&P only to the extent Accounting and legal costs for the
they are recognized for tax purposes. plan of liquidation and costs of
revoking the corporate charter.
They prevent duplication of
They retain their basis, with
losses by disallowing certain
adjustments for any gain recognized
losses on liquidation
by the target corporation.
distributions.
Don't know?
5 of 67
Definition
It requires the corporation to step down the basis of the property to
eliminate built-in losses.
Give this one a try later!
How does a complete corporate What does E&P represent for
liquidation affect shareholders? shareholders?
What does Section 362(e)(2)
What does Section 312 provide require regarding built-in loss
regarding E&P? property acquired in a 351
transaction?
Don't know?
6 of 67
