Which of the following are required for an acquisition to be considered tax-free?
A) Continuity of interest
B) A legitimate business purpose other than tax avoidance
C) The use of predominately acquirer shares to buy the target's shares
D) An all cash acquisition of the target firm's shares
E) A, B, and C only

Question

Quizplus · Accepted Answer

A tax-free acquisition requires continuity of interest, a legitimate business purpose other than tax avoidance, and the use of predominately acquirer shares to buy the target's shares. An all-cash acquisition of the target firm's shares would not meet these requirements.

Which of the Following Are Required for an Acquisition to Be