QUESTION 37 FakeDeals Corporation is a car dealership that has been in existence for 10 years. It has also been in the car leasing business for 6 years. Both businesses produce substantial amounts of cash, and FakeDeals has been investing this cash in mutual funds for the past 10 years. FakeDeals is interested in separating its businesses. It will create (a) new corporation(s) to receive assets in exchange for stock. Using a split-off "Type D" reorganization, FakeDeals can transfer the car leasing business to the new corporation and exchange the new corporation stock for some of the FakeDeals stock held by its shareholders. True False QUESTION 38 KnifeEdge Corporation has assets with a FMV of $800,000 and adjusted basis of $600,000. It has been manufacturing engineering equipment and laboratory tools for the last 8 years. KnifeEdge forms a new corporation, Roseate Corporation, by acquiring all of its stock in exchange for the laboratory tool division of KnifeEdge. Each of the KnifeEdge shareholders receives 1 share of Roseate stock for each 50 shares they own in KnifeEdge. This transaction is treated as a stock dividend. True False