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.

Question

Quizplus · Accepted Answer

Option B is false as it states that buyers prefer to buy stocks, which is not usually the case as buying stocks means the buyer is acquiring the ownership of the entire company with its underlying assets, liabilities, and potentially unknown legal obligations. Buyers usually prefer to buy assets to minimize potential liabilities and risks associated with the company they are acquiring.

Which of the Following Statements Does Not Describe a Motivation