Identify Which of the Following Statements Is True

question 35

Multiple Choice

Identify which of the following statements is true.

• A) Acquisition of 100% of the stock of a target corporation in a taxable transaction followed by a tax- free liquidation of the target corporation permits a step- up in the basis of the target corporation's assets to their FMV.
• B) Usually when 100% of the stock of a target corporation is purchased by an acquiring corporation, the basis of the assets of the target corporation reflects the purchase price of the target stock.
• C) Acquisition of the stock of a target corporation in a taxable acquisition transaction is reflected in an increased basis for the target corporation's assets on its books.
• D) All of the above are false.

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Definitions:

Simple Interest

An interest calculation method where the charge is based on the original principal amount, unaffected by the added interest.

Required Rate

The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.

Simple Interest

Simple interest is a method of calculating interest where the interest charge is based solely on the principal amount, not on previously earned interest.

Discounted

The process of determining the present value of a future amount by applying a discount rate.