When the sale of a business involves the sale of shares rather than the sale of assets, which of the following is false?
A)The after-tax proceeds of a share sale for an individual will not be subject to further levels of taxation.
B)If the proper conditions are met, the vendor may be able to use the capital gain exemption on the sale of the shares.
C)The share sale will result in capital property for the vendor.
D)The share sale may result in capital gains and business income for the corporation.

Question

Quizplus · Accepted Answer

The share sale may result in capital gains and business income for the corporation. This is true, not false. The sale of shares may result in both capital gains and business income for a corporation, as it depends on the nature of the assets being sold and any recapture or deemed dividend rules that may apply. The other options are true: A) The after-tax proceeds of a share sale for an individual will not be subject to further levels of taxation. B) If the proper conditions are met, the vendor may be able to use the capital gain exemption on the sale of the shares. C) The share sale will result in capital property for the vendor.

When the Sale of a Business Involves the Sale of Shares