Identify Which of the Following Statements Is False

question 27

Multiple Choice

Identify which of the following statements is false.

• A) A Sec. 338 election usually triggers taxation to the target corporation.
• B) A Sec. 338 election must be made not later than the fifteenth day of the ninth month following the first stock acquisition in a series of acquisitions that leads to 80% or more stock ownership.
• C) In a Sec. 338 deemed sale election, the shareholders of the target corporation sell their stock to the acquiring corporation.
• D) When a Sec. 338 election is made, the target corporation is treated as having sold all of its assets at their FMV at the close of the acquisition date.

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Definitions:

Operating Cash Flow

The cash generated from a company's normal business operations before financing and investment activities.

Net Capital Spending

The total expenditure on fixed assets less any sales of fixed assets during a given period, often used in assessing a company's investment in physical assets.

Earnings Before Interest And Taxes

A financial performance measure that calculates a company's profitability by excluding interest and taxes expenses.

Marginal Tax Rate

The rate of additional federal income tax to be paid on an additional dollar of income, which varies depending on income levels and filing status.