Question

Spin-offs are not taxed if the shareholders of the parent company are given at least:

a. 60 percent of the shares in the new company.
b. 90 percent of the shares in the new company.
c. 70 percent of the shares in the new company.
d. 80 percent of the shares in the new company.

Answer 1

Spin-offs are not taxed if shareholders of the parent company are given at least 80 percent of the shares in the new company.

Step-by-step explanation:

According to the information provided, spin-offs are not taxed if the shareholders of the parent company are given at least 80 percent of the shares in the new company. This means that option d. 80 percent of the shares is the correct answer. When shareholders receive the majority of shares in the new company, it is considered a tax-free transaction. It is important for shareholders to have a significant ownership stake in order to qualify for tax benefits.