Identify Which of the Following Statements Is True

Identify which of the following statements is true.

A) Corporations without E&P can distribute preferred stock as a stock dividend that is Sec. 306 stock.
B) The distribution of preferred stock as a stock dividend will result in income or a taxable gain being recognized by the shareholder on the date of the distribution if the stock is Sec. 306 stock.
C) Two corporations are considered to be brother- sister corporations for purposes of the Sec. 304 redemption rules if one shareholder owns more than 50% of each corporation.
D) All of the above are false.

Correct Answer:

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