Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock)reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

Question

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In a Type B reorganization, the acquiring corporation can elect to file a consolidated tax return with the target corporation if other requirements for filing consolidated returns are met. This is not mandatory, and the acquiring corporation does not automatically assume all of the tax attributes of the target corporation, nor is there a requirement to step up or step down the basis of the target corporation's assets to their fair market value on the acquisition date.

Acquiring Corporation Acquires All of the Stock of Target Corporation