One of the key motives for mergers is ________.
A) reducing the marginal tax rate
B) taking advantage of the other firm's tax loss carryforward
C) to sell the assets of the target company to increase the cash balance
D) increasing additional recaptured depreciation

Question

Quizplus · Accepted Answer

Taking advantage of the other firm's tax loss carryforward can result in significant tax savings for the merged company. This occurs when the target firm has incurred losses in previous years and has carried them forward to offset future profits. By merging with this firm, the acquiring company can use these losses to reduce their taxable income and ultimately pay less in taxes.

One of the Key Motives for Mergers Is ________