Which of the Following Statements Is True Regarding the Tax

question 70

Multiple Choice

Which of the following statements is true regarding the tax benefits from a loss corporation's carryovers that are taken in the current year?

• A)The § 382 yearly limitation is applied first to the NOL and capital loss carryovers,then built-in losses,and lastly to credit carryovers.
• B)If the maximum allowable by the § 382 limitation cannot be used in the current year due to not enough income earned by the successor corporation,the unused portion can be carried back to years that have occurred since the reorganization.
• C)None of the loss tax attributes will be available to the successor if the continuity of interest requirement is not met for at least two years.
• D)The IRS can apply § 269 to allow loss carryovers when there is no tax evasion motive in acquiring a loss corporation.
• E)None of the above statements is true.

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and variables in the market are at a balance, with no external pressures causing change in the short term.

Economic Profit

A measure of profit that includes all costs, including both the explicit costs of inputs and the implicit costs of capital.

Short-Run Loss

A situation where a firm's total revenues are less than its total costs within a short period, not allowing all factors of production to vary.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and the economy or the firm is fully adjusted to economic conditions, with no excess demand or supply in any market.