A Tax Advantage of Business Combination Can Occur When the Existing

question 1

Multiple Choice

A tax advantage of business combination can occur when the existing owner of a company sells out and receives:​

• A)​cash to defer the taxable gain as a "tax-free reorganization."
• B)​stock to defer the taxable gain as a "tax-free reorganization."
• C)​cash to create a taxable gain.
• D)​stock to create a taxable gain.

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Definitions:

Premiums

Extra payments required for insurance coverage or additional costs added to the usual price of services or goods, often in exchange for higher quality or added benefits.

Fast Moving Products

Products that are sold quickly and in large volumes, often requiring frequent restocking.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, values, or ideas at the same time.

Intermediary Cooperation

The collaboration between intermediaries such as brokers, agents, or distributors in the sales or distribution process of products or services.