Which of the following is a case in which tax gains are used as a justiﬁcation for purchasing another ﬁrm?
A) The target ﬁrm has resources to which the purchaser wants access.
B) The target ﬁrm has no unused debt capacity.
C) The target ﬁrm has access to markets that the bidder wishes to exploit.
D) The target ﬁrm has unused net operating losses that can be used by the bidder.
E) The target ﬁrm has resources that are complementary to the bidder.

Question

Quizplus · Accepted Answer

Tax gains can be used as a justification for purchasing another firm if the target firm has unused net operating losses that can be used by the bidder. This allows the bidder to reduce their taxable income and save on taxes. The other options involve other strategic reasons for purchasing another firm, such as gaining access to resources, markets, or complementary assets.

Which of the Following Is a Case in Which Tax