Which of the Following Statements Regarding Mergers and Taxes Is

question 58

Multiple Choice

Which of the following statements regarding mergers and taxes is FALSE?

• A)Carryback and carryforward provisions essentially deliver the benefits of conglomeration to a small firm with volatile earnings.
• B)It might appear that a conglomerate has a tax advantage over a single-product firm simply because losses in one division can offset profits in another division.
• C)Companies with current-year losses can also use them to offset earnings (carryback)for the twenty prior years.
• D)The IRS will disallow a tax break if it can show that the principal reason for a takeover is tax avoidance,so it is unlikely that the tax advantage could,by itself,be a valid reason to acquire another firm.

---

Definitions:

Self-discipline

The ability to control one's feelings and overcome weaknesses; the practice of doing tasks even if one does not want to, showing self-control.

Justice View

A view of ethical behaviour that holds that ethical behaviour treats people impartially and fairly.

Legal Rules

The formal directives and principles that govern behavior and are enforced by a controlling authority.

Terminal Values

Fundamental beliefs or ideals that individuals or organizations see as their ultimate goal, guiding their long-term behavior and decisions.