Which of the Following Is an Advantage of a Spin-Off

Multiple Choice

Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

A) A spin-off increases the transaction costs associated with selling the subsidiary.
B) Shareholders must immediately pay capital gains taxes versus ordinary income taxes on the value of the spin-off.
C) A spin-off guarantees a lower cost of capital.
D) The spin-off is not taxed as a cash distribution.
E) A spin-off results in a higher price for the subsidiary.