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1.) Explain the process of stock redemption. 2.) Why do non-corporate shareholders prefer stock redemptions to qualify...

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Question

Accounting

1.) Explain the process of stock redemption.

2.) Why do non-corporate shareholders prefer stockredemptions to qualify for sale treatment? (taximplications)

3.) Describe the difference between liquidating andnon-liquidating distributions from a partnership.

4.) The primary purpose of taxation is to create revenuefor the federal government. What are three secondarypurposes?

5.) What is the purpose of Domestic ProductionActivities Deduction (DPAD)?

Answer & Explanation Solved by verified expert
3.8 Ratings (412 Votes)
1SOMETIMES SHARES OF STOCK OFFERED BY A COMPANY ARE NOT REGULARMARKET DRIVEN COMMON SHAREINSTEAD THEY MAY BE PREFERENCE SHARESWHICH WILL CONSIDERED FIXED INCOME SECURITIES AND ARE ISSUED WITH A PAR VALUE WHEN THE PAR VALUE IS PAID BACKTO THE PURCHASER OF THE PREFERENCE SHARE THIS IS CONSIDERED A REDEMPTIONAN THE PROCESS OF REDEMPTION IS AS FOLLOW NOTEREDEEMABLE PREFRENCE SHARE CAN BE REEDEMED ONLYEQITY SHARE CAN NOT BE REEDEMED AT ANY COST 1 IT MUST BE AUTHORIZED BY ARTICLES OF ASSOCIATION OF COMPANY 2THE SHARES WIIL BE REEDEEMED ONLY IF THEY ARE FULLY PAID UP    See Answer
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1.) Explain the process of stock redemption.2.) Why do non-corporate shareholders prefer stockredemptions to qualify for sale treatment? (taximplications)3.) Describe the difference between liquidating andnon-liquidating distributions from a partnership.4.) The primary purpose of taxation is to create revenuefor the federal government. What are three secondarypurposes?5.) What is the purpose of Domestic ProductionActivities Deduction (DPAD)?

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