Which of the following items does NOT accurately describe a potential consequenc

Question

Which of the following items does NOT accurately describe a potential consequence of the recharacterization of debt as stock? A. Deductions taken for interest could be deferred until the corporation is able to sustain a characterization of the instrument as debt B. A repayment of principal could be recharacterized as a stock redemption C, Interest payments could be recharacterized as nondeductible dividend distributions D. A lack of control as set forth in IRC Sections 351 and 368(c) may result from a recharacterization, which could turn a tax-free transfer into a fully taxable transaction

Explanation / Answer

d) A lack of control as set forth in IRC Sections 351 and 368(c) may result from a recharacterization, which could turn a tax-free transfer into a fully taxable transaction

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