Asked by Michelle Carrey on Jul 02, 2024
Verified
When a corporation is formed,the transaction is always tax-free.
Tax-Free
Income, dividends, or distributions that are not subject to federal income tax.
Formed Corporation
A business entity that is legally created and registered under state law, offering liability protection to its owners.
Transaction
An agreement or exchange between two parties involving goods, services, or financial assets.
- Understand the prerequisites and taxation implications of corporate formation, including the exemption for tax-free transfers.
Verified Answer
PS
Preksha Sharma6 days ago
Final Answer :
False
Explanation :
While some transactions may qualify for tax-free treatment, it is not always the case. The details of the transaction and the type of corporation being formed can impact the tax treatment.
Learning Objectives
- Understand the prerequisites and taxation implications of corporate formation, including the exemption for tax-free transfers.