Deer Corporation Was Acquired Last Year by Lobo Corporation in a Transaction

question 135

Multiple Choice

Deer Corporation was acquired last year by Lobo Corporation in a transaction causing an ownership change.At the time of the acquisition,the fair market value of Deer was $1.5 million and the Federal long-term tax-exempt rate was 5%.In the current year,Lobo has $600,000 of taxable income and excess credits carryovers from Deer amounting to $40,000.What is Lobo's Federal income tax for the year if Lobo is in the 34% tax bracket?

• A)$178,500.
• B)$96,000.
• C)$55,000.
• D)$27,540.
• E)None of the above.

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Definitions:

Arbitrary Manner

A way of deciding or acting that is not based on system or plan, but instead on random choice or personal whim.

Malay

Pertains to a major ethnic group within Southeast Asia, primarily found in Malaysia, Indonesia, Singapore, Brunei, and Thailand, or the Austronesian language spoken by them.

Pacific Islanders

People native to the islands in the Pacific Ocean, including Polynesians, Micronesians, and Melanesians.

Indigenous Australians

The Aboriginal and Torres Strait Islander peoples of Australia, recognized as the original inhabitants of the continent.