A holding company may be used as a post-closing organizational structure for all but which of the following reasons?
A) A portion of the purchase price for the target firm included an earn-out
B) The target firm has a substantial amount of unknown liabilities
C) The acquired firm's culture is very different from that of the acquiring firm
D) Profits from operations are not taxable
E) The transaction involves a cross border transaction

Question

Quizplus · Accepted Answer

A holding company is not typically used as a post-closing organizational structure solely for the purpose of avoiding taxes on profits from operations. The other reasons listed (including earn-out payments, unknown liabilities, cultural differences, and cross-border transactions) are all valid reasons for using a holding company structure.

A Holding Company May Be Used as a Post-Closing Organizational