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.

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Definitions:

Socialism

An economic and political system where the means of production are owned and controlled by the state or public, aiming for equal distribution of wealth and resources.

Individualism

A concept that gives preference to individual freedoms, liberties, and rights.

Communism

A political and economic ideology that aims for a classless society where all property is publicly owned, and each person works and is paid according to their abilities and needs.

Egalitarianism

A belief in human equality, particularly with respect to social, political, and economic rights and privileges.