Which Two of These Are Required for an Acquisition to Be

question 8

Multiple Choice

Which two of these are required for an acquisition to be considered tax-free? I.The bidder must purchase the target firm for less than its current market value.
II.The acquisition must have a business purpose other than the avoidance of taxes.
III.The stockholders in the target firm must retain an equity interest in the bidder.
IV.The acquisition must be a lump sum cash transaction.

• A)I and II only
• B)III and IV only
• C)II and III only
• D)I and III only
• E)II and IV only

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Definitions:

Promote Efficiency

Actions or strategies undertaken to improve the productivity and effectiveness of an operation or process, minimizing waste and maximizing output.

Budget Committee

A group responsible for overseeing the preparation, implementation, and review of budgets within an organization.

Internal Auditors

Professionals within an organization responsible for evaluating and improving the effectiveness of risk management, control, and governance processes.

Budget Director

An individual responsible for overseeing the preparation and implementation of an organization's budget, ensuring financial discipline and planning.