Which of the Following Statements Does Not Describe a Requirement

question 21

Multiple Choice

Which of the following statements does not describe a requirement that must be met in a tax-deferred reverse triangular merger?

• A)The 40 percent continuity of interest test must be met with respect to the stock transferred from the acquisition corporation to the target corporation shareholders.
• B)The target must hold substantially all of the target corporation's properties and the properties of the acquisition subsidiary after the merger.
• C)The continuity of business enterprise test must be met with respect to the target corporation.
• D)The target corporation shareholders must receive voting stock in the acquiring corporation.

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Definitions:

Associate

An entity over which the investor has significant influence.

Investor

An individual or organization that allocates capital with the expectation of receiving financial returns.

Pension Scheme

A plan or fund that provides retirement income to employees, funded by contributions from employer, employee or both.

Related Party

Individuals or entities that have a connection to the reporting entity that could influence the financial and operating policies of the entity.