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

question 23

Multiple Choice

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

• A)receive income which 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 shares on a dollar-for-dollar basis.
• 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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Definitions:

Worldwide Output

Worldwide output refers to the total production of goods and services by all countries around the globe.

Migration

The movement of people from one place to another with the intention of settling, permanently or temporarily, in a new location.

Domestic Output

The total value of goods and services produced within a country's borders in a given time period.

Wage Rates

The amount of money paid to an employee per unit of time (e.g., hour, day) or for a specific quantity of work done.