Match the following items with the statements that follow. Terms may be used more than once.
-Apple Corporation transfers voting stock to Orange Corporation in exchange for substantially all of its assets and its liabilities associated with the plant and equipment. Its general liabilities are not acquired by Apple. Orange distributes the Apple stock to its shareholders in exchange for their Orange stock. Orange then liquidates.
A)Boot
B)Business credits
C)Capital gain
D)Continuity of business enterprise
E)Continuity of interest
F)Dividend
G)Discount rate
H)Earnings and profits
I)Federal long-term tax-exempt rate
J)Liability assumption
K)Ordinary gain
L)Ownership change
M)Section 382 limitation
N)Sound business purpose
O)Step transaction

Question

Quizplus · Accepted Answer

The transaction described involves a continuity of business enterprise, as Apple Corporation is acquiring substantially all of Orange Corporation's assets and liabilities associated with the plant and equipment, and Orange is liquidating after distributing Apple stock to its shareholders.

Match the Following Items with the Statements That Follow