Acquiring Corporation Acquires All of the Stock of Target Corporation

question 75

Multiple Choice

Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock) reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

• A)Acquiring and Target Corporations can elect to file a consolidated tax return.
• B)Acquiring and Target Corporations must file a consolidated tax return.
• C)Acquiring Corporation assumes all of the tax attributes of Target Corporation.
• D)Acquiring Corporation must step up or step down the basis of the Target Corporation's assets to their FMV on the acquisition date.

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Definitions:

General Deterrence

The use of punishment to discourage people in general from committing crimes, based on the fear of penal consequences.

Using People

The unethical practice of exploiting individuals for personal gain or advantage.

Rehabilitation

The process aimed at enabling individuals, especially offenders or addicts, to achieve personal transformation and reintegration into society.

Kingdom of Ends

A philosophical concept from Immanuel Kant suggesting a society where individuals treat each other as ends in themselves, not means to an end, emphasizing mutual respect and dignity.