In a Tax-Free Acquisition, the Shareholders of the Target fiRm

question 24

Multiple Choice

In a tax-free acquisition, the shareholders of the target firm:

• A)receive income that is considered to be tax-exempt.
• B)gift their shares to a tax-exempt organization and therefore have no taxable gain.
• C)are viewed as having exchanged their shares.
• D)sell their shares to a qualifying entity thereby avoiding both income and capital gains
• Taxes.
• E)sell their shares at cost thereby avoiding the capital gains tax.

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