Which of the Following Statements Does Not Describe a Motivation

question 71

Multiple Choice

Which of the following statements does not describe a motivation by the buyer or seller in the acquisition or sale of a company?

• A)Buyers generally prefer to buy assets because they can take a tax basis in the assets acquired equal to the assets' fair market value.
• B)Buyers generally prefer to buy stock because they can take a tax basis in the underlying assets of the company acquired equal to the assets' fair market value.
• C)Sellers generally prefer to sell assets in a tax-deferred reorganization to avoid higher tax rates imposed on gains from the sale of noncapital assets.
• D)Sellers generally prefer to sell stock because they can recognize capital gain on the sale taxed at preferential rates.

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Definitions:

Selling Price

The price at which a service or product is sold to a buyer.

Net Operating Income

The total profit of a company after subtracting operating expenses but before interest and taxes.

Operating Income

Income generated from regular business operations, excluding any investment income, taxes, or extraordinary items.

Selling Price

The amount of money charged for a product or service.