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:

Psychological

Pertaining to the mind or mental processes and how they affect behavior, emotions, and thought patterns.

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Posttraumatic Stress Disorder

An emotional and mental disorder set off by going through or seeing a frightening event, characterized by ongoing nightmares, flashback episodes, and severe anxiousness.