Final answer:
The special rule when a corporation distributes its own obligations is that there are no immediate tax consequences for the shareholders. This is because the transaction is not considered a taxable event.
Step-by-step explanation:
When a corporation distributes its own obligations, such as notes, bonds, or debentures, there are no immediate tax consequences for the shareholders. Therefore, the correct answer to the question 'What is the special rule if a corporation distributes its own obligations?' is C) No tax consequences for shareholders.
Corporations can choose different ways to access financial capital, including borrowing from banks, issuing bonds, or offering stock. Choosing to issue bonds involves committing to scheduled interest payments, whereas issuing stock leads to sharing company ownership with the public and answering to a board of directors and shareholders. However, in the case of a corporation distributing its obligations, the focus is on the tax implications for those who receive these securities as part of a distribution.