Which of the Following Statements Regarding Mergers and Taxes Is

question 58

Multiple Choice

Which of the following statements regarding mergers and taxes is FALSE?

• A)Carryback and carryforward provisions essentially deliver the benefits of conglomeration to a small firm with volatile earnings.
• B)It might appear that a conglomerate has a tax advantage over a single-product firm simply because losses in one division can offset profits in another division.
• C)Companies with current-year losses can also use them to offset earnings (carryback)for the twenty prior years.
• D)The IRS will disallow a tax break if it can show that the principal reason for a takeover is tax avoidance,so it is unlikely that the tax advantage could,by itself,be a valid reason to acquire another firm.

---

Definitions:

U.S. Citizens

Individuals who are legally recognized as members of the United States, with rights and responsibilities under its laws.

Military

Refers to the armed forces of a country, which are typically responsible for its defense and security, engaging in warfare and combat operations.

Legal Definition

A specific interpretation of a term or concept within the context of the law, often determined by legislation or judicial decisions.

Terrorism

The use of violence and intimidation, especially against civilians, in the pursuit of political aims.