If an Acquisition Is Completed Using a Cash Payment,then the Acquisition

question 22

Multiple Choice

If an acquisition is completed using a cash payment,then the acquisition is:

• A)taxable.
• B)viewed as exchanging of shares and is not taxed.
• C)a tax-free transaction as no capital gains or losses are recognized.
• D)none of these options.

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Definitions:

Liquidation

Liquidation is the process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent.

Partner's Interest

This refers to the ownership share or equity a partner holds in a partnership, representing their portion of the profits, losses, and capital.

Guaranteed Payment

Payments made to a partner within a partnership that are made without regard to the partnership's income and are guaranteed for services or use of capital.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured, and may also cover regular medical services or long-term nursing care needs.