Which of the following statements is incorrect? a. The purchase of a corporation

Question

Which of the following statements is incorrect? a. The purchase of a corporation is always treated as the purchase of the corporate stock. b. The purchase of an unincorporated sole proprietorship is always treated as the purchase of its assets. c. A taxpayer purchasing a corporation in which the assets are appreciated would prefer to purchase the stock of the corporation. d. Only "The purchase of an unincorporated sole proprietorship is always treated as the purchase of its assets" and "A taxpayer purchasing a corporation in which the assets are appreciated would prefer to purchase the stock of the corporation" are correct. e. "The purchase of an unincorporated sole proprietorship is always treated as the purchase of its assets", "A taxpayer purchasing a corporation in which the assets are appreciated would prefer to purchase the stock of the corporation", and "The purchase of a corporation is always treated as the purchase of the corporate stock" are correct.

Explanation / Answer

Option a is incorrect. This is because the purchase of a corporation takes place through either purchase of corporate stocks or a merger of the two entities. In the former the two entities exist separately as holding and subsidiary. In the latter the acquired entity loses its existence and its assets and liabilities are taken over by the acquiring entity.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.