Which of the Following Statements Does Not Describe a Motivation

question 71

Multiple Choice

Which of the following statements does not describe a motivation by the buyer or seller in the acquisition or sale of a company?

• A)Buyers generally prefer to buy assets because they can take a tax basis in the assets acquired equal to the assets' fair market value.
• B)Buyers generally prefer to buy stock because they can take a tax basis in the underlying assets of the company acquired equal to the assets' fair market value.
• C)Sellers generally prefer to sell assets in a tax-deferred reorganization to avoid higher tax rates imposed on gains from the sale of noncapital assets.
• D)Sellers generally prefer to sell stock because they can recognize capital gain on the sale taxed at preferential rates.

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Definitions:

Gambling Agreement

A contract or arrangement between parties to stake something of value, typically money, on the outcome of an event with an uncertain result, with the primary intent of winning additional money or material goods.

Exculpatory Clause

A clause in a contract that basically frees one party (usually the drafter of the agreement) from all liability arising out of performance of the contract; generally based on factors such as consumer ignorance or a great deal of unexplained fine print that serve to deprive the less powerful party of a meaningful choice.

Liability Release

a legal document where one party agrees not to hold another party liable for risk, damage, or loss.

Green Hair

A hair color that has been dyed various shades of green or hair that has turned green due to exposure to chlorine or certain chemicals.