Acquiring Corporation Is 100%-Owned by Peter Hart

question 70

Multiple Choice

Acquiring Corporation is 100%-owned by Peter Hart. Target Corporation is 100% owned by Dick Weber. The two individuals are not related. Target Corporation has $400,000 of NOL carryovers at the time Acquiring Corporation is considering making a cash acquisition of part or all of Target Corporation's stock. What is the maximum amount of Target stock that can be acquired in a single transaction without the Sec. 382 loss limitation rules applying to the NOLs?

• A)49%
• B)50%
• C)80%
• D)Any acquisition of Target stock will cause the Sec. 382 loss limitation to apply.

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Definitions:

Underwriting Securities

The process through which investment banks issue new securities to the market, assuming the risk of selling them at a certain price.

Accepting Deposits

A banking activity that involves receiving money from customers for safekeeping or for earning interest, typically in savings or checking accounts.

Systematically Important

Refers to entities or institutions whose failure could trigger a financial crisis, necessitating regulatory oversight to ensure stability.

Economic Growth

An increase in a country's capacity to produce goods and services, compared from one period of time to another.