1-In a statutory merger, only assets and liabilities shown on the target firm’s balance sheet automatically transfer to the acquiring firm. True or False
2- Which of the following is not true about mergers and acquisitions and taxes?
A-Tax considerations and strategies are likely to have an important impact on how a deal is structured by affecting the amount, timing, and composition of the price offered to a target firm.
b. Tax factors are likely to affect how the combined firms are organized following closing, as the tax ramifications of a corporate structure are quite different from those of a limited liability company or partnership.
c. Potential tax savings are often the primary motivation for an acquisition or merger.
d. Transactions may be either partly or entirely taxable to the target firm’s shareholders or tax-free.
E. None of the above
3- Which of the following is not true of taxable asset purchases?
A. Net operating losses carry over to the acquiring firm
B. The acquiring firm may step up its basis in the acquired assets
C. The target firm is subject to subject to gains or losses on the asset sale
D. Target firm shareholders’ can be subject to a tax liability on the distribution of sale proceeds Target firm Tax
E. Target firm Tax credits cannot be transferred to the acquiring firm
4- LBO investors seldom sell assets to repay debt used to acquire the firm. True or False