Acquiring Corporation Acquires All of the Stock of Target Corporation

question 75

Multiple Choice

Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock) reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

• A)Acquiring and Target Corporations can elect to file a consolidated tax return.
• B)Acquiring and Target Corporations must file a consolidated tax return.
• C)Acquiring Corporation assumes all of the tax attributes of Target Corporation.
• D)Acquiring Corporation must step up or step down the basis of the Target Corporation's assets to their FMV on the acquisition date.

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Definitions:

Nurture

The influence of environmental factors, including education, culture, and personal experiences, on an individual's development and behavior.

Language Acquisition Device

A hypothetical module proposed by linguists that suggests humans have an innate ability to acquire language.

Innate Ability

Natural talents or capabilities that an individual is born with, as opposed to skills developed through experience or education.

Language Development

The process by which children come to understand and communicate language during early childhood.