The Main Difference to Shareholders Between a Tax-Free and a Taxable

question 42

Multiple Choice

The main difference to shareholders between a tax-free and a taxable acquisition is that

• A)in a tax-free acquisition, the shares are only exchanged, while in a taxable transaction the shares are considered sold and realized capital gains or losses are taxed.
• B)in a tax-free acquisition, a capital gain or loss is realized and then new shares are issued; in a taxable transaction, the assets are revalued, taxed on any capital gains or losses, and then shares are exchanged.
• C)in a tax-free acquisition, the shareholders simply take the cash and depart, while in a taxable transaction the shareholders must stay with the new entity.
• D)in a tax-free acquisition, the shares are only exchanged, while in a taxable transaction the shares are considered sold and realized capital gains or losses are taxed; and in a tax-free acquisition, the shareholders simply take the cash and depart, while in a taxable transaction the shareholders must stay with the new entity.

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Definitions:

Promotional Mix

The combination of marketing tools used by a business to effectively promote its products or services, including advertising, sales promotions, public relations, personal selling, and direct marketing.

Sales Promotion

Short-term marketing strategies aimed at stimulating consumer demand or improving product availability to boost sales, such as discounts, coupons, or special offers.

Public Relations

The method of strategic communication that fosters beneficial connections between organizations and their audience.

Encoding

The process of converting ideas or messages into verbal, written, or visual formats to communicate effectively with a target audience.