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.

Understand the concept of marginal revenue and its implications for monopoly pricing and output decisions.

Recognize the characteristics and implications of natural monopolies and public utilities.

Identify and understand the effects of economies of scale and network externalities on market structure.

Understand the role of patents and other incentives in promoting innovation and invention.

---

Definitions:

Biological Perspective

An approach to psychology focusing on physical and biological bases of behavior, including genetic, hormonal, and neurophysiological processes.

Amygdala

Brain structure located near the hippocampus, responsible for fear responses and memory of fear.

Black Bile

In ancient and medieval physiology, it was one of the four bodily humors, believed to be associated with melancholy.

Ancient Greeks

A civilization belonging to a period of Greek history that lasted from the Dark Ages (around 1200 B.C.) to the end of antiquity (circa 600 A.D.). Known for their advancements in philosophy, science, and the arts.