ACC 4302 Exam 2 Questions & Answers Fall 2022

ACC 4302 Exam 2 Questions & Answers Fall 2022 T/F 1. In general, if a shareholder’s ownership interest is not diminished as a result of a stock redemption, the Code will treat the transaction as a sale or exchange. a. True b. False ANSWER: False RATIONALE: If a shareholder’s ownership interest is not diminished as a result of a stock redemption, the Code generally will treat the transaction as a dividend distribution. 2. A shareholder’s basis in property acquired in a stock redemption is the property’s fair market value as of the date of redemption. ANSWER: True 3. The DPAD is limited by 50% of the total W-2 wages paid by a taxpayer. ANSWER: False RATIONALE: Only those wages applicable to DPGR can be considered. 4. The AMT exemption amount of $40,000 phases out entirely once a corporation’s average gross receipts exceeds $310,000. ANSWER: False RATIONALE: The exemption is reduced by 25% of the amount by which AMTI exceeds $150,000 and disappears at $310,000. 5. In corporate reorganizations, if an acquiring corporation is using property other than stock as consideration, it may recognize gains but not losses on the transaction. ANSWER: Tru