Question

Identify which of the following statements is

false.

A.

A person who has an option to purchase stock is considered to own the stock.

B.

A stock redemption is treated as a sale or exchange only if the​ shareholder's ownership of one particular class of stock is terminated.

C.

An individual is considered to own the stock owned by his​ parents, children,​ spouse, and grandchildren under the family attribution rules of Sec. 318.

D.

An individual is not considered to own stock owned by a brother under the family attribution rules of Sec. 318

Answer 1

Answer-

The Option A is False. The person who has an option to purchase stock is not considered to own the stock.

The Option B is True. A stock redemption that terminates a shareholder's entire stock ownership  will qualify for sale or exchange treatmentand the attribution rules in general applies to determine whether the shareholder's stock ownership has been completely terminated.

The Option C is True. The Internal Revenue Code Section 318 section stipulates that an individual owns what their spouse, children, grandchildren, or parents own.

The Option D is True. An individual owns stock directly or indirectly by Members of family which includes Spouse,  children, grandchildren, and parents and does not include siblings as brother or sister.