To Protect Yourself from Unknown Tax Liabilities When Buying the Stock

question 70

Multiple Choice

To protect yourself from unknown tax liabilities when buying the stock of a business, it makes sense to place part of the purchase price in an escrow account that is earmarked to pay for any corporate liabilities. This is referred to as ______.

• A) holdback money
• B) thinning the assets
• C) escrow settlement
• D) goodwill