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?
A) Acquiring and Target Corporations can elect to file a consolidated tax return.
B) Acquiring and Target Corporations must file a consolidated tax return.
C) Acquiring Corporation assumes all of the tax attributes of Target Corporation.
D) Acquiring Corporation must step up or step down the basis of the Target Corporation's assets to their
A) Acquiring and Target Corporations can elect to file a consolidated tax return.
Acquiring and Target Corporations can elect to file a consolidated tax return, but they are not required to do so. Target Corporation retains its tax attributes when a Type B reorganization occurs. No basis adjustment occurs when Acquiring acquires the Target stock in a Type B tax-free reorganization.
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Sand engaged in operations at the start of 2018 and reported $550,000 in pre-tax book income for the year. Tax depreciation for Sand exceeded book depreciation by $50,000. The tax rate for 2018 was 30%, and Congress had enacted a tax rate of 20% for the years after 2018.What is the deferred tax liability for Sand at December 31, 2018?
A. $15,000 B. $20,000 C. $40,000 D. $10,000
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Answer the following statement true (T) or false (F)
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