Which of the Following Statements Regarding Mergers and Taxes Is

question 32

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.

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Definitions:

Embryo Sac

The female gametophyte generation in flowering plants.

Vessel Elements

Components of the xylem tissue in plants, specialized tube-like cells that transport water and nutrients vertically.

Labeling

Identifying the names of objects.

Motherese

The simplified and exaggerated language style often used by adults when talking to babies and young children, also known as "parentese" or "child-directed speech."