The IRS is most apt to disallow an acquisition if it:
A)moves the foreign operations of the acquired firm to the U.S.
B)is totally financed with debt.
C)is designed primarily to reduce federal taxes.
D)is designed to transfer technology in a tax-free transfer.
E)allows shareholders to avoid currently realizing their gains from a stock acquisition.

Question

Quizplus · Accepted Answer

The IRS is likely to disallow an acquisition that is designed primarily to reduce federal taxes, as this is seen as an abuse of the tax system. Such an acquisition may involve aggressive tax planning or the use of tax loopholes, and the IRS is likely to scrutinize it closely to ensure that it complies with tax laws and regulations.

The IRS Is Most Apt to Disallow an Acquisition If