The Tax Status of the Transaction May Influence the Purchase

question 22

Multiple Choice

The tax status of the transaction may influence the purchase price by

• A) Raising the price demanded by the seller to offset potential tax liabilities
• B) Reducing the price demanded by the seller to offset potential tax liabilities
• C) Causing the buyer to reduce the purchase price if the transaction is taxable to the target firm's shareholders
• D) Forcing the seller to agree to defer a portion of the purchase price
• E) Forcing the buyer to agree to defer a portion of the purchase price

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