QuizChapter C7 Quiz Submit Quiz This Question 1 pt 2 of 7 1

Quiz:Chapter C:.7 Quiz Submit Quiz This Question: 1 pt 2 of 7 (1 complete) This Quiz: 7 pts possible From the standpoint of the target corporation shareholders, what is the advantage of a taxable stock acquisition by a purchaser corporation compared to the purchasers acquiring all the target\'s assets in a taxable transaction followed by a liquidating distribution from the target to its shareholders? O A. If target corporation is involved in a taxable stock acquisition by purchaser corporation, each shareholder will be taxed on a capital gain (loss) equal to the difference between the amount received for the stock and his or her stock basis. their distributions, as ordinary and capital gain (loss) treatment which results in a dividend-received-deduction. to the difference between the amount received for the stock and its total equity basis O B. If target corporation is involved in a taxable stock acquisition by purchaser corporation, the end result is target corporation and each shareholder is taxed on C. If target corporation is involved in a taxable stock acquisition by purchaser corporation, target corporation will be taxed on a dividend income gain (loss) equal OD. Both A and C. Click to select your answer

Solution

OPTION A. TARGET STOCK ACQUISITION ONE LAYER IN THIS TARGET COMPANY WILL NOT BE TAXABLE BUT SHREHOLDERS ARE TAXABLE AS CAPITAL GAIN FOR THIS I.E AMOUNT RECIEVED - HER STOCK BASIS

SO OPTION A IS CORRECT